Chicago | Reuters –– Chicago Mercantile Exchange lean hogs closed lower for a sixth straight session on Thursday, and set fresh contract lows, plagued by a host of bearish fundamentals, traders said.
April closed 1.825 cents per pound lower at 62.3 cents, and earlier made a new contract low of 61.125 cents in electronic trading (all figures US$). May ended 1.075 cents lower at 72.25 cents after posting a fresh contract low of 70.325 cents.
Hanging over the market is the strong dollar, stacked-up pork on U.S. West Coast docks and the possibility of a meat surplus if importers ban U.S. chicken following the outbreak of bird flu in Arkansas.
“Too much current supply for current demand,” said Linn Group analyst John Ginzel. He referred to increased hog numbers at a time of tepid pork sales that undercut cash and wholesale pork values.
Thursday morning’s average cash hog price in the western Midwest sagged 85 cents per hundredweight (cwt) from Wednesday to $61.11, U.S. Department of Agriculture said.
Separate USDA data showed the day’s wholesale pork price slipped 31 cents per cwt to $67.90 from Wednesday.
Recent futures losses stirred bargain hunting that lifted contracts from session lows.
Funds involved in CME’s livestock markets sold or “rolled” some of their April positions and simultaneously bought deferred contracts. The trading strategy known as the “roll” is tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).
Thursday was the last official day for the S+P GSCI roll procedure.
Cattle mixed, choppy
CME live cattle contracts settled mixed after a volatile session with April helped by cash price optimism, but back months felt profit-taking pressure, traders said.
April closed 0.2 cent/lb. higher at 155.8 cents, and June down 0.3 cent to 146.625 cents.
Packers bidding for cattle earlier in the week suggest they need supplies, a trader said.
Cash cattle bids in the southern U.S. Plains stand at $161/cwt versus $163-$164 asking prices, said industry sources. Last week, cash cattle moved at mostly $161-$162.
The morning’s choice wholesale beef price fell $1.20/cwt from Wednesday to $246.27. Select cuts jumped $1.47, to $246.35, the USDA said.
CME feeder cattle futures reflected mixed live cattle futures trading.
March closed up 0.075 cent/lb. to 214.675 cents, and April 0.2 cent weaker at 212.9 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.Tagged cattle futures, CME, hog futures