Chicago | Reuters — Chicago Mercantile Exchange lean hogs finished mixed on Tuesday, supported by futures’ discounts to CME’s recent hog index at US78.9 cents, but pressured by weak cash and wholesale pork values, traders said.
Spot-August futures, which will expire on Aug. 14, closed up 0.075 cent/lb. at 76.725 cents, and most-active October 0.625 cent lower at 62.35 (all figures US$).
The average Tuesday morning price for market-ready (cash) hogs in Iowa/Minnesota had sagged 24 cents/cwt from Monday to $74.01, based on U.S. Department of Agriculture data.
The morning’s wholesale pork value, or cutout, was at $87.91/cwt, a $2.29 drop from Monday with ribs the only item not priced lower, USDA said.
Despite their extremely profitable margins, primarily due to cheaper hogs, packers do not have to compete for animals that are in good supply, a trader said.
Pork processor margins for Tuesday were at a positive $25.75 per head, compared with a positive $23.95 on Monday and a positive $18.45 a week ago, as calculated by HedgersEdge.com.
Plentiful pork has allowed grocers to “cherry pick” when and how much product they need for Labour Day grilling demand, the trader said.
Cattle ease, await cash sales
CME live cattle posted modest losses after an up-and-down day, as investors pocketed profits while waiting for cattle in the cash market to change hands this week, traders said.
Spot-August futures closed down 0.075 cent/lb. at 150.175 cents, and October 0.15 cent lower at 149.15 cents.
Market participants look for packers to pay roughly the same for cattle as last week given tight supplies and resurgent beef demand in the face of less-expensive pork and chicken.
Falling gasoline prices and the seasonal lull in beef prices could give retailers more confidence about putting more product in their meat cases, traders and analysts said.
Last week, cash cattle in the U.S. Plains moved at mostly $150 to $152/cwt, according to feedlot sources.
Tuesday morning’s wholesale choice beef price was up 61 cents/cwt from Monday, to $239.13. Select cuts rose $1.16, to $233.08, USDA said.
CME feeder cattle garnered support from steady-to-higher cash feeder cattle prices and the steep drop in corn futures.
August finished down 0.175 cent/lb. to 214.075 cents, and September up 0.05 cent higher at 210.425 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, hog futures, USDA