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U.S. livestock: CME October hogs fall to contract low

Cattle decline after Wednesday's surge

(Gloria Solano-Aguilar photo courtesy ARS/USDA)

Chicago | Reuters — Chicago Mercantile Exchange October lean hog futures fell sharply to a contract low on Thursday, weighed down by a months-long decline in cash prices and abundant supplies, traders said.

Deferred hog futures contracts as well as most live cattle and feeder cattle contracts also eased on technical selling and profit-taking.

Traders were squaring positions ahead of U.S. Department of Agriculture data due after the close of trading on Friday in which the government will report how many cattle were placed on feed in August and how much meat was in cold storage.

CME October hogs dropped 1.325 cents to 57.325 cents/lb., finishing just above the earlier contract low of 57.075 cents (all figures US$). The most-active December hogs contract fell 2.125 cents to 57.8 cents, easing from Wednesday’s two-week high.

The CME Group’s index of the cash hog market has been on a downward trajectory since July and was hovering at the lowest levels since April.

USDA said hogs in the top cash market of Iowa and southern Minnesota were down 85 cents to $49.43/cwt.

“Just too many,” Kooima and Kaemingk Commodities broker Scott Varilek said of hogs.

A few analysts expected USDA on Friday to show 573.5 million lbs. of pork in cold storage in August and 426.5 million lbs. of beef.

A Reuters poll of analysts expected USDA to show cattle placed in feedlots for fattening in August down 2.9 per cent from last year, suggesting that fewer animals would reach slaughter weight in February and March.

Cattle futures which surged by the most in 11 months on Wednesday declined on Thursday as investors locked in profits ahead of the USDA reports and as dealers awaited cash cattle sales in the Plains.

“The pretty big jump yesterday has people holding off,” Varilek added. “Some bullish Cattle on Feed estimates were priced in.”

CME October live cattle eased 0.85 cents to 110.1 cents/lb. and most-active December live cattle down 0.05 cent, to 116.2 cents.

CME October feeder cattle were off 1.4 cent, to 155.875 cents/lb.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago; additional reporting by Theopolis Waters.

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