Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures finished lower Thursday on profit-taking after three consecutive days of gains, traders said.
May hogs closed 0.5 cent per pound lower at 79.85 cents, and June down 0.55 cent to 83.5 cents/lb. (all figures US$).
Despite strong pork cutout values, investors were nervous about further cash price direction as processor margins shrink.
“Packers would like to control production by pushing up the cutout, which they did, or lower cash bids,” said U.S. Commodities analyst Don Roose.
Thursday morning’s wholesale pork price, or cutout, climbed $1.19 per hundredweight (cwt) from Wednesday to $78.68/cwt, according to the U.S. Department of Agriculture.
Market-ready (cash) hogs in the Midwest Thursday morning were steady to up $1/cwt, regional hog dealers said.
Thursday’s pork packer margins were a negative $6.55 per head, compared with a negative $5.60 on Wednesday, according to Colorado-based analytics firm HedgersEdge.com.
Live cattle drift lower
CME live cattle felt pressure from cash price caution and funds that shifted June positions into back months, traders said.
Funds in CME live cattle and hog markets that follow the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI) periodically sold, or rolled, their June long positions and bought deferred contracts. Monday was the first of five days for the S+PGSCI roll process.
June ended 0.85 cent lower at 149.375 cents/lb., and August fell 0.65 cent, to 148.275 cents.
Cash cattle bids in Kansas and Texas stand at $157/cwt versus $163 asking prices, industry sources said.
On Wednesday, they said a few cattle in Nebraska sold at $157 to $160, compared to mostly $163 there a week ago. Last week, cash cattle in the U.S. Plains traded at mostly $160 to $163.
Market bulls viewed positive margins and the morning’s wholesale beef price jump as supportive for cash prices.
Bearish traders anticipate weaker cash values based on the seasonal buildup in supplies and packers curbing kills to conserve their margins.
Thursday morning’s choice wholesale beef price rose $1.73/cwt from Wednesday to $257.88/cwt. Select cuts jumped $2.04, to $246.04, the USDA said.
CME’s feeder cattle May contract drew support from lower corn prices, with remaining months pressured by live cattle market selling.
April closed 0.4 cent/lb. higher at 214.9 cents, August down 0.075 cent to 216.8 cents and September ended 0.575 cent lower at 215.9 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.