Chicago | Reuters — Chicago Mercantile Exchange lean hog futures declined more than one per cent on Tuesday, giving back a portion of gains notched on Monday in a technical setback, traders said.
Hogs on Monday surged from a multimonth low, boosted in part by technically oversold conditions. But the market remained anchored by abundant U.S. hog supplies and relatively weak prices in cash hog markets.
The most-active CME April hog contract fell 1.45 cents, or 2.3 per cent, to 61.6 cents/lb. (all figures US$). Front-month February hogs shed 0.95 cent, or 1.5 per cent, to 56.425 cents/lb.
“Yesterday was so overdone to the upside that we needed to have some follow-through support (to propel further gains), and we didn’t get it,” said one livestock futures trader who was not authorized by his company to speak with the media.
Traders have been waiting for news that China and Mexico would remove tariffs on imports of U.S. pork, which could result in larger export sales of U.S. meat. With no news on that front, or any other fresh information, the traders were reliant largely on daily government price data to help set direction in the futures market.
The U.S. Department of Agriculture after the close of futures trading said cash hog prices in the top Iowa and southern Minnesota market were 23 cents higher, to $49.93/cwt. But the higher hog prices were met by lower pork values, with the wholesale pork cutout down $1.90, to $66.20/cwt, led by drops in prices for hams and pork bellies.
CME live cattle futures were higher in bull-spreading, supported by a lack of deliveries against futures — a suggestion that cash markets could be strong this week.
The CME Group has not posted any deliveries against February live cattle futures. A large amount of deliveries would indicate cattle owners see the futures market as more beneficial than seeking private deals in the cash market.
CME February cattle ended up 0.975 cent, to 126.7 cents/lb., gaining on the more-active April contract, which finished up 0.625 cent at 127.625 cents.
“I would anticipate that cash (cattle) would be fully steady this week,” said Cassie Fish, an analyst and author of industry blog The Beef.
Cash cattle last week in the U.S. Plains traded mostly between $123 and $124/cwt, traders said.
Thinly traded feeder cattle futures were narrowly lower, with March feeders easing 0.4 cent, to 143.825 cents.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.