Chicago | Reuters — Chicago Mercantile Exchange lean hog futures closed higher on Wednesday, helped by modest cash and wholesale pork price gains, said traders.
Investors unwound some of Tuesday’s long CME live cattle short lean hog spreads that, along with buy stops and speculative buying, sent some deferred hog contracts to new highs.
December hogs finished up 0.45 cent/lb., to 64.475 cents (all figures US$). February ended 0.95 cent higher at 69.6 cents, and spiked to a fresh contract high of 69.775 cents.
Packers paid slightly more for slaughter-ready or cash hogs, although not as much as they had in recent weeks, to keep pace with their still profitable but slipping margins, traders and analysts said.
While talk persists that cash prices are about to top out, some farmers are still harvesting corn and soybeans rather than moving hogs which may be underpinning cash prices, they said.
Wednesday’s U.S. Department of Agriculture weekly hog weight data suggests farmers are moving animals to market in a timely fashion, another supportive cash price feature.
Market participants are monitoring pork demand for signs of retailers switching to featuring beef next month as the end of National Pork Month approaches.
Lower front cattle months
Nearby CME live cattle futures closed lower, weakened by profit-taking and caution before cash prices later this week, said traders.
Some investors sold October and December futures and at the same time bought deferred contracts, sending them to new highs.
October live cattle, which will expire on Oct. 31, finished 0.6 cent/lb. lower at 113.025 cents. Most actively traded December closed down 0.45 cent, to 119.075 cents.
The lack of trades at Wednesday morning’s Fed Cattle Exchange pulled futures from session highs.
However, the October contract is pricing in potential $112-$113/cwt sales of cash cattle in the U.S. Plains by Friday, said traders and analysts.
Historically high packer profits and fewer cattle for sale than last week should support cash prices, they added.
But futures’ weakness and Wednesday morning’s mixed wholesale beef values tempered early-week cash price enthusiasm.
CME feeder cattle futures closed mostly higher on buy stops. And some investors purchased deferred months and simultaneously sold October futures ahead of its expiration on Thursday.
October ended down 0.275 cent/lb. to 154.85 cents. Most actively-traded November closed up 0.05 cent to 156.175 cents, and January ended 0.6 cent higher at 155.6 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.