Chicago | Reuters — U.S. lean hogs futures fell to 3-1/2-month lows on Thursday as investors continued liquidating long bets amid plentiful supplies and lacklustre pork export sales, traders said.
Live and feeder cattle futures also eased at the Chicago Mercantile Exchange, with cattle prices reversing from multiweek highs reached earlier in the session.
Hogs declined by more than one per cent as several contracts set new lifetime lows and hogs on a continuous chart hit the lowest levels since April 13.
The U.S. Department of Agriculture forecast U.S. hog and pork production to hit record highs in 2016, and multimonth lows in wholesale pork prices suggested that grocers were struggling to sell the pork already on hand.
“A choppy grind lower seems like the most likely direction until cash and cutout find a bottom,” a South Dakota hog broker said.
Most-active CME October hogs shed one cent, to 58.5 cents/lb., finishing just above their earlier life-of-contract low of 57.575 cents. The CME Group’s index of the cash hog market has eased for more than 20 days in a row.
USDA earlier said 14,501 tonnes of U.S. pork were sold for export last week, up sharply from the previous week. But China was not a buyer; imports to the world’s top pork consumer contributed to a surge in lean hog futures earlier this year.
Live cattle futures jumped to a one-month high and feeder cattle to a 1-1/2-month high, before prices turned lower. The contracts had rallied the first three days of the week on optimism for higher trades in U.S. Plains cash cattle markets, coupled with technical buying.
“Live cattle futures rallied to resistance of the 100-day moving average and were due for a pullback without any bullish news,” said broker Brock Thompson of Tru Trader Co.
However, shortly after the close of futures trading, beef packers started aggressively bidding for cattle, with slaughter-weight animals ultimately trading lightly at $118/cwt in Texas, Kansas and Nebraska, sales that were up $2 from last week.
The strong move in the cash market could propel cattle futures high when trade resumes on Friday, analyst David Hales said in his Hales Cattle Letter.
CME October live cattle finished Thursday’s session down 0.425 cent at 114.775 cents/lb. and CME September feeder cattle were off 0.375 cent at 145.225 cents.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.