Chicago Mercantile Exchange (CME) hog futures settled higher on Thursday, aided by strong cash hog prices that helped extend the futures market’s winning streak to five straight months.
CME hogs finished up 2.3 per cent for January.
Hogs at the CME also drew support from fund buying after the April contract broke through the 100-day moving average of 89.3 cents per pound (all figures US$).
Spot February settled 0.5 cent higher at 87.6 cents/lb. Most-active April ended up 0.1 cent, at 89.35 cents.
The U.S. Department of Agriculture on Thursday reported the average cash hog price in the most-watched Iowa/Minnesota market was $88.89 per hundredweight (cwt), up $2.05 from Wednesday.
"Packers were in a tight spot as colder weather and snow in parts of the Midwest made it difficult to truck animals from farms," a trader said.
But processors may lower bids for hogs early next week as their margins turned negative on Thursday, he said.
The average pork packer margin for Thursday was estimated at a negative $5.20 per head, compared with a positive $1.35 on Wednesday and a negative $6.65 on Jan. 24, according to HedgersEdge.com.
Cattle slip on cash
CME live cattle futures posted modest losses as sellers brought futures down closer to cash prices, analysts and traders said.
Slaughter-ready cattle in the southern Plains traded at $125/cwt on Wednesday, up $3 from last week’s sales but $1 to $2 below what bullish futures traders had expected.
CME spot February live cattle closed at 127.625 cents/lb., down 0.375 cent. April ended down 0.125 cent to 132.8 cents.
Futures were up 1.27 per cent week-to-date, but down 1.54 per cent for the month.
Fewer cattle for sale this week forced packers to raise bids to get what they needed, a trader said. But, they avoided spending more than they had to as wholesale beef prices continued to struggle, he said.
The price for wholesale choice beef on Thursday was $185.32/cwt, down $1.44 from Wednesday; and select cuts dropped 77 cents to $180.25, according to USDA.
With this week’s cash cattle trade nearly completed, many investors adjusted positions ahead of USDA’s semi-annual cattle inventory report due on Friday at 2 p.m. CST.
Analysts expect the report to show the U.S. cattle herd fell for a sixth straight year as drought pushed up feed costs.
CME feeder cattle firmed on expectations for tighter cattle supplies in the coming months.
Spot January settled 0.475 cent/lb. higher at 146.3 cents at its expiration at noon CST. March feeders, the new lead month, closed at 149.55 cents, up 0.45 cent.
Feeder futures were down 3.37 percent for the month.
— Theopolis Waters writes for Reuters from Chicago.