U.S. livestock: CME hogs snap back on higher cash, wholesale pork prices

Traders anticipate larger cattle supplies, but unsure when

(iStock photo)

Chicago | Reuters — Chicago Mercantile Exchange hog futures on Tuesday recovered from Monday’s selloff, helped by higher wholesale pork values and surging market-ready, or cash, hog prices, traders said.

Fund buying and bargain hunting enhanced futures advances, they said.

June hogs, which will expire on Thursday, closed up 0.375 cent/lb. at 80.525 cents (all figures US$). Most actively-traded July ended 2.05 cents higher at 81.45 cents, and above the 200-day moving average of 80.283 cents.

Packers paid up for hogs, at the detriment of their margins, as supplies tighten seasonally, said traders and analysts.

They said processors charged retailers more for pork to offset unprofitable margins. Grocers and restaurants also bought meat for spring grilling and June 17 Father’s Day advertisements, they added.

Cattle end mostly firmer

Most CME live cattle contracts gained modestly after investors bought deferred months and simultaneously sold June in a trading strategy known as bear spreading, said traders.

They said uneasiness about this week’s cash cattle prices further pressured June live cattle. But the future’s discount to cash price expectations limited market losses, they added.

June live cattle closed down 0.125 cent per pound at 108.525 cents. August ended up 0.125 cent at 104.3 cents, and October finished 0.35 cent higher at 107.35 cents.

Feedlots in Kansas and Texas are asking $117/cwt for their slaughter-ready, or cash, cattle with no bids from packers. Last week, cash cattle in the U.S. Plains traded from $114 to $115.

Processors seem less willing to compete for animals because there are more of them for sale than last week, a trader said. Some packers may be satisfied with current inventories while waiting for the forecasted increase in cattle numbers.

The market is anticipating larger cattle supplies, but are unsure when that will happen, said Oak Investment Group president Joe Ocrant.

CME feeder cattle drew support from live cattle futures gains, but were pressured by higher corn prices that tend to increase input costs for feedlot operators.

August closed up 0.225 cent/lb. at 146.175 cents. September ended unchanged at 147.25 cents. October finished 0.4 cent lower at 147.175 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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