U.S. livestock: Hog futures higher on spreading

Chicago | Reuters — U.S. lean hog futures were narrowly higher in bull-spreading on Thursday as some investors exited positions in nearby contract months ahead of a quarterly government supply report that was released after the close of trading.

The U.S. Department of Agriculture in the report said the U.S. hog herd as of June 1 totaled 73.451 million, up three per cent from a year ago and the largest for the time period tracked by the government since 1964.

While the data was generally in line with analyst expectations, confirmation of a record-large hog herd could weigh on hog futures in the coming days, analysts said.

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“Nothing in this report shows signs of hope that we are going to get a rally out of this,” said Top Third Ag Marketing analyst Craig VanDyke.

However, robust pork demand has bolstered prices for hogs and pork despite the larger U.S. herd and the threat of reduced exports amid tariffs on U.S. imports in Mexico and China.

“The good news is that pork exports have been good this year and we continue to kill a good amount. The market has done a good job holding up in the face of fantastic supply,” VanDyke added.

Front-month Chicago Mercantile Exchange July lean hog futures settled up 0.9 cent to 81.125 cents/lb. and most-active August hogs up 0.675 cent to 75.725 cents (all figures US$).

Prices for wholesale pork and hogs in the top cash market in Iowa and southern Minnesota each were higher, USDA data said.

Cattle futures also gained in bull-spreading as traders bought back nearby months and rolled into deferred contracts.

Thinly traded CME June live cattle finished up 1.175 cents to 108.2 cents per pound, one day before the contract’s expiration on Friday. Most-active August live cattle notched comparatively smaller gains, climbing one cent to 103.725 cents.

CME August feeder cattle firmed 1.05 cents, to 146.825 cents/lb., rising on technical buying after the contract surpassed several moving averages during the previous
session.

USDA said choice-grade wholesale beef prices were down $2.06, to $213.24/cwt.

Retailers have already bought the vast majority of the beef and pork they would put on sale for next week’s U.S. Independence Day holiday, when many consumers cook meat on outdoor grills. Now, more muted retailer demand and forecasts for hot U.S. temperatures that could limit outdoor grilling was likely weighing on beef prices, analysts said.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago.

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