Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures tumbled Tuesday on slowing demand for pork, in a session disrupted by technical problems that halted trading on the exchange’s Globex electronic platform near the close.
Before Globex was restored nearly an hour later, brokers were forced to execute orders in the exchange’s open-outcry trading pits, a venue that has lost nearly all of its trading volume to computer screens in recent years.
April hogs closed 1.725 cents per pound lower at 123.3 cents and actively traded June closed 2.925 cents lower at 118.75 cents, a one-month low for the contract (all figures US$).
“It’s all related to the product and, to me, it looks like the product is topping out,” said Dennis Smith, a broker with Archer Financial Service.
“Easter demand should be completed and ham prices are at record-high levels. This thing could fall quite a ways just off of a lack of demand at this price level,” Smith said.
The wholesale pork carcass cutout value slipped by a penny per hundredweight (cwt) on Tuesday morning after sinking $1.14 the previous day, according to the U.S. Department of Agriculture. Ham prices clawed back only $3.20 of the prior day’s $5.59 loss, a sign that prices were nearing their peak, traders said.
Cash hog prices in the closely watched Iowa and southern Minnesota market fell $1.27 per cwt on the day.
Cattle futures rise
CME live cattle edged higher as traders expected cash cattle in the U.S. Plains to trade near last week’s prices, which were above spot futures, but poor packer margins kept a lid on gains.
April live cattle rose 0.3 cent/lb., to 143.325 cents. June added 0.35 cent, to 135.275 cents.
Packers were lightly bidding $146/cwt for feedlot cattle in Kansas and the Texas panhandle on Tuesday, but trading may ultimately develop around $148, the low end of last week’s trading range, traders said.
“April live cattle are $5 below cash so the easiest way for them to go is higher,” said Lane Broadbent, president of KIS Futures.
Beef packer margins were at a negative $110.70 per head, a slight improvement from a negative $120.20 on Monday but down from a negative $76.95 a week ago, according to livestock marketing advisory service HedgersEdge.com LLC.
CME feeder cattle futures gained on firm cash markets, notably the large Oklahoma City market where steers traded steady to $2 higher in a weekly auction. Higher corn prices limited gains in deferred months.
April feeders closed 0.8 cent/lb. higher at 178.300 cents and May ended 0.025 cent higher at 178.875 cents.
— Karl Plume reports on ag commodity markets for Reuters from Chicago.