Chicago | Reuters — Chicago Mercantile Exchange lean hogs on Tuesday settled lower for the first time in five sessions, hit by profit-taking and weaker cash prices before packing plants close over the Christmas holiday, traders said.
February hogs ended 2.1 cents/lb. lower at 64 cents, and April 1.2 cents lower at 67.475 cents (all figures US$).
Tuesday morning’s cash hog prices in Iowa/Minnesota averaged $53.50/cwt in light volume, $1.42 lower than on Monday, the U.S. Department of Agriculture said.
Many traders observed the session’s activity from the sidelines while awaiting USDA’s quarterly hog report on Friday at 11 a.m. CT.
“You’ve kind of reached a position where futures are overbought and those who were long are banking profits. And the big thing you have coming up is the hog report,” said U.S. Commodities president Don Roose.
Mostly lower cattle futures
Most CME live cattle contracts ended lower after investors claimed profits before this week’s cash prices and Friday’s USDA monthly Cattle on Feed report, also due out at 11 a.m. CT, traders said.
On average analysts expect the report will show fewer cattle entered feedlots in November than a year ago.
The recent run up in wholesale beef prices ignited bull spreads, which consisted of investors that bought December futures and simultaneously sold deferred months.
December live cattle closed up 0.15 cent/lb. to 112.1 cents. Most actively-traded February ended down 0.425 cent to 115.5 cents and April down 0.3 cents, to 113.825.
Bullish traders foresee steady-to-better cash prices given solid wholesale beef demand and highly-profitable packer margins.
Market bears believe more animals for sale and ample packer inventories heading into back-to-back holiday-shorted work weeks will pressure cash prices.
Wednesday’s sale of roughly 5,300 cattle at the Fed Cattle Exchange could provide the first indication of this week’s cash price direction. Last week, cattle there and elsewhere in the U.S. Plains traded at $112/cwt.
Tuesday morning’s choice wholesale beef price was $1.50/cwt higher than on Monday at $196.89. Select cuts were up 99 cents, to $184.04, USDA said.
Average beef packer margins for Tuesday were a positive $98.60 per head, up from a positive $38.05 a week earlier, as calculated by HedgersEdge.com.
Profit-taking, technical selling and weaker back-month live cattle futures undercut CME feeder cattle. January feeders closed 0.875 cent/lb. lower at 130 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.