U.S. livestock: CME hogs notch three-month high

Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures hit a three-month high on Friday, with help from buy stops and technical buying, traders said.

December futures led advances after investors bought the contract and simultaneously sold deferred months.

December hogs, which will expire on Wednesday, closed 1.05 cents/lb. higher at 56.725 cents (all figures US$). Most actively traded February ended 0.725 cent/lb. higher at 61.55 cents after surpassing its 200-day moving average of 61.345 cents.

There was a lot of technical trading and people probing for buy stops above 62.42 cents in the February contract, said Schwieterman Inc. broker Domenic Varricchio.

Hog futures gained for a fifth-straight session as tight supplies and healthy packer profits fueled the almost two-week cash price rally and recently sent wholesale pork values higher.

However, hog merchants believe cash and wholesale pork prices are about to top out as plants prepare to close over the Christmas and New Year’s holidays. They also point out that ham values could erode after grocers stock up for winter holiday demand.

Friday afternoon’s prices for slaughter-ready, or cash, hogs in Iowa/Minnesota averaged $51.65/cwt, $1.10 lower than on Thursday, the U.S. Department of Agriculture said.

Separate USDA data on Friday afternoon showed the average wholesale pork price slipped seven cents/cwt from Thursday to $75.81.

Weaker live cattle futures

Lower cash prices, with the prospect that packers will again cut cash bids next week, pressured CME live cattle futures, said traders.

They said short-covering and firmer wholesale beef values lifted contracts from session lows.

December live cattle closed 0.325 cent/lb. lower at 108.725 cents, and February down 0.125 cent at 110.525 cents.

This week, packers paid $109 to $112/cwt for cash cattle that brought $114 to $115 a week ago, said feedlot sources.

Processors may soon curtail slaughters to preserve their margins. Reduced kills also tend to improve wholesale demand from grocers seeking to avoid a potential inventory shortage.

Friday afternoon’s choice wholesale beef price was down 54 cents/cwt from Thursday to $188.94. Select cuts were up 26 cents, to $171.68, USDA said.

Market bulls are betting that much colder weather and possibly snow forecast for parts of the U.S. Plains next week will disrupt livestock production in the region.

Weaker live cattle futures pressured CME feeder cattle. January closed 0.65 cent/lb. lower at 125.95 cents.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.