Chicago | Reuters — Chicago Mercantile Exchange lean hogs ended sharply lower on Thursday pressured by weaker initial cash prices and fund liquidation, but not before futures approached a six-month high for a second straight session, said traders.
February hogs ended 1.675 cents/lb. lower at 65.85 cents (all figures US$). April closed 2.925 cents lower at 67.225 cents and below the 20-day moving average of 68.346 cents.
Thursday morning’s slaughter-ready, or cash, hog price in Iowa/Minnesota averaged $63.81/cwt in light volume, down $1.72 from Wednesday, the U.S. Department of Agriculture said.
But after futures closed, USDA quoted the Iowa/Minnesota cash price up 76 cents per cwt to $63.98, but down 13 cents to $63.90 in the western Corn Belt.
Hog merchants said recent weather-related issues, profitable packer margins and brisk wholesale pork demand would underpin some cash prices.
Still they worried that NAFTA renegotiation between the U.S. and Mexico might threaten lucrative U.S. pork exports south of the border.
Mexico’s president on Thursday canceled his meeting with U.S. President Donald Trump over the building of a wall between both countries.
Mexico is a huge buyer of U.S. pork, but there was nothing in Thursday’s news that should have produced Thursday’s “exaggerated” futures market selling, said independent livestock futures trader Dan Norcini.
He said the canceled meeting was due to conflicts about the building of the wall and who would pay for it, not NAFTA.
Lower live cattle futures
CME live cattle futures retreated on sell stops, technical selling and uneasiness about prices for unsold cash cattle this week, said traders.
Investors await Friday’s USDA monthly Cattle on Feed report.
February live cattle closed 1.175 cents/lb. lower at 118.7 cents, and below the 10-day moving average of 119.563 cents. April finished 1.1 cents lower at 117.575 cents.
On Thursday some cash cattle in the U.S. Plains brought $122/cwt, compared to mostly $121 to $123 a week ago, said feedlot sources. They said other sellers are holding out for at least $124.
Packers are caught between trying to recover lost margins and making sure they have enough product for pre-booked meat orders from grocers, a trader said.
Technical selling and lower live cattle futures sank CME feeder cattle contracts.
January feeders, which expired at noon CT, ended down 0.55 cent/lb. to 131.825 cents. Most actively traded March closed 2.75 cents lower at 127.1 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.