Chicago Mercantile Exchange hogs closed mixed on Monday as investors bought the February contract and sold spot December futures before it expires on Dec. 17, traders and analysts said.
Spot December ended 0.3 cent per pound lower at 81.375 cents. February hogs closed 0.85 cent higher at 89.85 cents (all figures US$).
The December contract felt more pressure from lower cash hog and wholesale pork prices amid ample supplies at heavier weights.
Arctic air and blowing in snow in parts of the Midwest could snarl the transportation of livestock to market and limit animal weight gains, traders said.
Late on Monday, the wholesale pork price, or cutout, was at $90.18 per hundredweight (cwt), which was down 14 cents from Friday, according to the U.S. Department of Agriculture.
Separate USDA data on Monday afternoon quoted the closely watched Iowa/Minnesota hog market at $76.76/cwt, $1.96 lower than Friday.
Fund buying in the February contract developed after it broke above the 10-day moving average of 89.72 cents.
Deferred hog futures were supported by continued speculation that the porcine epidemic diarrhea virus (PEDv), which is fatal to baby pigs, will crimp supplies of slaughter ready hogs in the spring and summer of 2014.
Beef prices lift live cattle
CME live cattle futures firmed, led by the rebound in wholesale beef prices and expectations of fewer cattle for sale this week, traders and analysts said.
Monday afternoon’s wholesale choice beef price, or cutout, rose $1.05 from Friday to $202.52/cwt, and select cuts jumped $1.14 to $188.12, based on USDA data.
The cutout turnaround is encouraging considering some traders thought adverse weather in the Northeast would dent beef demand, a trader said.
Dan Vaught, an economist with Doane Advisory Services said “frigid weather dominating the Great Plains isn’t helping the feedlot performance of the animals.”
“If the cattle get cold they’re not going to gain much weight and that applies relative tightness to market ready cattle supplies going forward,” he said.
Lacklustre beef demand, until Monday, coupled with mostly steady cash cattle prices sank beef packer margins deeper in the red.
According to HedgersEdge.com, beef packer margins for Monday were at a negative $59.05 per head, compared with a negative $39 on Friday and negative $19.30 a week ago.
Investors await this week’s cash cattle sales. Last week, packers in Texas and Kansas paid $132/cwt for cash cattle, feedlot sources said. They said Nebraska cash cattle moved at $131 to $132.
Monday is the first notice day for live cattle deliveries against December futures that will expire on Dec. 31.
Spot December closed up 0.175 cent/lb. at 131.6 cents. February ended up 0.2 cent at 133.05 cents.
CME feeder cattle drew support from firmer live cattle futures and technical buying.
CME livestock traders await USDA’s monthly crop production and world supply and demand reports scheduled for 11 a.m. CT on Tuesday. The data could have feeding implications for livestock producers.
January feeder cattle ended 0.675 cent/lb. higher at 165.15 cents, and March closed at 165.4 cents, up 0.725 cent.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.