U.S. livestock: CME lean hogs surge, cattle firm

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures jumped more than one per cent on Wednesday, fueled by firm cash hog prices and fund buying, traders said.

Heavy snowfall and cold temperatures across a large portion of the U.S. Midwest and Plains regions also lent support to hog futures due to uncertainty about available hog supply and pork production, traders said.

A winter storm that brought heavy snow and ice to much of the U.S. Midwest farm belt on Wednesday slowed grain and livestock shipments to a near standstill, reduced pork production and halted wheat milling at the country’s second-largest flour mill.

Slaughter volume was reduced on Wednesday due to late starts at plants or canceled shifts. The reduction comes as weekly hog slaughter volume has been crimped in recent weeks by extreme wintry weather. The U.S. Department of Agriculture estimated a 398,000-head kill on Wednesday, compared with 425,000 a year ago.

Concerns regarding the spread of the porcine epidemic diarrhea virus (PEDv), a deadly pig virus, continued to support deferred month hog futures contracts.

“Because it spread so quickly and has such a devastating impact on young piglets I think the market is anticipating quite a shortage of hogs,” said Dan Norcini, an independent livestock trader.

February hogs closed at 86.45 cents per pound, up 1.44 per cent, or 1.225 cents. April ended at 95 cents/lb., up 2.01 per cent, or 1.875 cents.

Cattle get support from hogs

CME live cattle futures ended firm on spillover support from the surge in hog futures, while weak wholesale beef prices and expectations of lower cash cattle trade limited gains, traders said.

According to USDA data the afternoon wholesale choice beef price was at $216.64 per hundredweight (cwt), down $3.85 from Tuesday and $15.17 lower than a week ago. Select cuts were at $219.57/cwt, down $2.58 and $13.80 less than a week ago, the data showed.

There were unconfirmed light sales of cash cattle at $141/cwt late on Tuesday in addition to a small sale at $142.50/cwt on Monday. Last week, cattle in Texas and Kansas moved at mostly $145/cwt, $2 lower than the week before, feedlot sources said.

The light cash trades at lower prices indicate packers may not purchase large amounts of cattle at higher prices this week as their profit margins remain in the red.

Beef packer margins on Wednesday improved slightly to a negative $52.90 per head, compared with a negative $57 per head on Tuesday, and a positive $53.75 a week ago, according to HedgersEdge.com.

February live cattle ended at 139.7 cents/lb., up 0.1 cent. April ended at 139.1 cents, down 0.2 cent.

CME feeder cattle futures ended narrowly mixed as soft Chicago Board of Trade corn prices lent some support.

March ended at 166.925 cents/lb., down 0.05 cent, and April ended at 167.65 cents/lb., up 0.15 cent.

— Meredith Davis reports on livestock commodity markets for Reuters from Chicago.

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