Chicago | Reuters — Chicago Mercantile Exchange lean hogs settled lower on Friday, pressured by profit-taking before the weekend that snuffed their six-session rally, traders said.
May closed 0.95 cents per pound lower at 76 cents, and June was down 0.175 cent at 81.25 cents (all figures US$).
Some prospective buyers were leery of deferred contracts’ premiums to the CME’s hog index for April 29 at 68.16 cents despite strong cash and wholesale pork values.
CME lean hogs’ premiums were causing concern, but sharply rising cash prices may cause the index to catch up to May futures by next Wednesday, said independent livestock futures trader Dan Norcini.
Tighter supplies boosted Thursday’ morning’s market-ready, or cash, hogs in the Midwest by as much as $3 per hundredweight (cwt), regional dealers said.
Fewer hogs, grilling demand and packers upping costs for pork at wholesale to counter higher cash prices lifted cutout values for a seventh day in a row.
Friday morning’s wholesale pork price, or cutout, gained 64 cents/cwt from Thursday to $73.92, according to the U.S. Department of Agriculture (USDA).
USDA’s estimated 35,000-head Saturday kill, down 14,000 from last week, might reflect dwindling supplies or packer cutbacks to salvage their margins, a trader said.
Live cattle slump
CME live cattle settled lower after a volatile session, pressured by slumping wholesale beef values that overshadowed futures’ bullish discount to cash prices, traders said.
Friday morning’s choice wholesale beef price fell $2.40/cwt from Thursday to $254.50/cwt. Select cuts dropped $1.67, to $242.38, USDA said.
On Friday, the bulk of cash cattle in the U.S. Plains traded at $160 to $163/cwt, up as much as $4 from last week, industry sources said.
Packers caught short of inventory after increasing kill rates were forced to spend more for cattle, even through beef demand continued to struggle against lower-cost pork and chicken.
Futures seesawed throughout the morning as contracts danced on either side of their moving averages.
June ended 0.525 cent/lb. lower at 149.175 cents, and above the 10-day moving average of 149.02 cents. August closed down 0.275 cent at 147.825 cents, after topping the 20-day moving average of 147.78 cents.
CME feeder cattle drew support from softer corn futures and live cattle contracts’ move up from session lows.
Futures’ discounts to the exchange’s latest feeder cattle index at 217.37 cents provided more support.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.