Chicago | Reuters — Chicago Mercantile Exchange hogs rose for a second straight day on Wednesday as slaughter-ready, or cash, hog prices escalate in the midst of a seasonal supply squeeze, traders said.
Sultry weather in parts of the U.S. Midwest caused livestock to eat less feed, which slows their weight gain and delivery to processors.
The U.S. Department of Agriculture’s weekly data on Wednesday showed hogs in Iowa/Southern Minnesota, on average, at 278.7 lbs., down 2.2 lbs. from a week earlier and nearly a pound less than a year ago.
Dwindling hog numbers forced packers to consistently outbid each other for supplies, which has eroded their profits.
Meanwhile, wholesale pork demand could taper after retailers and restaurants top off inventories for June 17 Father’s Day advertisements, said traders and analysts.
Also, some consumers may turn to lighter fare as hot weather curbs appetites for heavier meals, they said.
June hogs, which will expire on Thursday, closed up 0.475 cent/lb., at 81 cents (all figures US$). Most actively traded July ended 1.325 cents higher at 82.775 cents.
Cattle close lower
CME live cattle contracts sagged amid technical selling and investor caution ahead of market-ready, or cash, prices later this week, said traders.
Market participants exercised caution while waiting for a forecast cattle supply buildup, they said.
“Because there are enough cattle… the lack of demand in the dog days of summer is actually what’s going to hurt our market,” said CHS Hedging analyst Steve Wagner.
June live cattle closed 0.6 cent/lb. lower at 107.925 cents. August ended down 0.4 cent at 103.9 cents, and below the 10-day moving average of 104.09 cents.
Packers so far this week had bid $110/cwt for cash cattle in the U.S. Plains that are priced from $117 to $120.
Last week, cash cattle in the Plains fetched $114 to $115.
Bullish traders look for packers to pay roughly the same as last week for cattle given their still historically high margins.
Market bears cited this week’s bigger showlists, or numbers of cattle for sale, and pending supply growth as cash price headwinds.
CME feeder cattle mimicked weaker live cattle futures.
August closed down 0.175 cent/lb. at 145.625 cents.
— Reporting for Reuters by Theopolis Waters in Chicago.