U.S. livestock: Lower cash prices again send CME hogs to six-year low

Chicago | Reuters –– Chicago Mercantile Exchange lean hog contracts drifted to a six-year low for a second straight day on Friday as plentiful seasonal supplies pulled prices for market-ready (cash) hogs lower, traders said.

Spot December finished 0.4 cent/lb. lower at 55 cents, and February ended down 0.3 cent at 58.3 cents.

Cash hog prices in Iowa/Minnesota on Friday morning fell $1.32/cwt from Thursday to $56.97, the U.S. Department of Agriculture said.

USDA estimated this week’s slaughter at 2.36 million head, including an estimated Saturday slaughter of 194,000 head, up 107,000 from a week ago.

Margins are sufficiently profitable to encourage packers to process as many hogs as possible, “they just don’t have to go far to find them,” a trader said.

Investors are eyeing pork demand as supermarkets prepare to advertise ham and turkey over the Thanksgiving and Christmas holidays.

Separate government data showed the morning’s wholesale pork price was up 29 cents/cwt from Thursday to $76.07, with higher prices for all cuts except ribs.

Live cattle end higher

CME live cattle futures were strengthened by short covering after three straight days of losses pegged to weaker cash and wholesale beef values, traders said.

Spot December finished at 134.925 cents/lb., 0.525 cent higher, and February was up 0.25 cent at 137.15 cents.

This week, packers paid $130-$135/cwt for cash cattle in the U.S. Plains, down from $133-$138.50 a week ago, said feedlot sources.

Friday morning’s wholesale choice beef price slumped $2.94/cwt from Thursday, to $215.92. Select cuts fell $1.27, to $207.38, the USDA said.

Packers in parts of the Plains penalized feedlots for having cattle that were above required weight limits, while beef demand struggles against ham and turkey sales, according to traders and analysts.

Steve Wagner, an analyst with CHS Hedging, expects beef demand to pick up between mid-November and early December, based on the U.S. October unemployment rate, which hit a 7-1/2-year low.

Funds at times sold the December contract and simultaneously bought deferred months, in conjunction with the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Friday was the first of five days of the process known as the S+PGSCI “roll.”

CME feeder cattle were pressured by the drop in the exchange’s feeder cattle index for Nov. 5 to 190.27 cents from 191.80 cents for Nov. 4.

Spot November closed unchanged at 181.625 cents, and January was 0.65 cent lower at 172.025.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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