Chicago | Reuters — Chicago Mercantile Exchange lean hog futures closed higher on Monday, supported by the morning’s cash and wholesale pork price gains, traders said.
The spot-October contract closed 0.95 cent/lb. higher at 66.275, and December up 0.35 cent at 62.3 cents (all figures US$).
Monday morning’s average cash hog price in the western Midwest was up 15 cents/cwt from Friday at $77.38, U.S. Department of Agriculture said.
The wholesale pork price, at $89.91/cwt, was up 55 cents from Friday, underpinned by $2.48-higher pork bellies, USDA said.
“Profit margins are good enough that packers felt that they had better leave cash at least steady,” an Indiana hog dealer said.
Pork processor margins for Monday were at $20.50 per head, compared with $19.05 on Friday and $23.95 a week ago, as calculated by HedgersEdge.com.
Futures’ discounts to CME’s hog index for Aug. 13 at 78.53 cents drew more buyers.
Uneven live cattle settlement
Friday’s soft cash prices prompted bear spreading, which consisted of investors who sold the August live cattle contract and simultaneously bought deferred months, traders said.
Speculators also purchased back months in the belief that fewer cattle will come to market at that time than expected.
Spot-August futures closed down 0.55 cent/lb. at 147.9 cents, October 0.85 cent higher at 147.7 cents and December up 0.4 cent at 149.325 cents.
Last Friday, cattle in the U.S. Plains sold lightly at $148 to $151/cwt, compared to mostly $150 to $152 a week earlier, feedlot sources said.
“It just seemed like nobody wanted to budge on cash last week, which added a lot more cattle to this week’s showlist,” a trader said.
Feedlots were unwilling to sell cattle at lower prices knowing how much packers are making, he said.
HedgersEdge.com calculated Monday’s beef packer margins at $23.20 per head, compared with $28.75 on Friday and $10.75 a week ago.
Analysts and traders estimated the U.S. Plains showlist, the number of cattle for sale, this week at roughly 268,000 head, which is about 21,000 more than last week.
Fund buying surfaced after October broke through the 20-day moving average of 147.07 cents.
CME feeder cattle ended mostly lower, with August helped by back-month live cattle buying, while sell stops pressured other contracts.
August futures finished 0.5 cent higher at 214.4 cents, September down 0.3 cent at 209.225 cents and October 0.525 cent lower at 206.9.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.