Chicago | Reuters — Chicago Mercantile Exchange lean hog futures settled mostly lower on Friday as falling cash hog prices and poor packer margins weighed on the market, traders said.
Worries over slowed pork export demand due to threatened retaliatory tariffs by key trading partners, including Mexico and China, also weighed on the hog market.
CME July lean hogs settled down 0.65 cent at 79.825 cents/lb. and actively traded August ended 0.35 cent lower at 75.375 cents (all figures US$).
“We’ve got some pushback from the packers due to margin concerns and we’ve got some trade issues, so we’ve got a problem brewing for the hog market right now,” said Rich Nelson, chief strategist with consultancy Allendale Inc.
“Cash hogs have been down in four of the past five trading sessions,” he said.
Average prices for cash hogs in the closely followed Iowa and southern Minnesota market were $2.61/cwt lower on Friday. For the week, prices fell more than $4, according to the U.S. Department of Agriculture.
Packer margins have improved slightly with the lower hog costs, but remain negative. Livestock marketing advisory service HedgersEdge.com LLC estimates the average pork packer margin at a negative $1.82 per head on Friday, compared with a negative $8.75 a week ago.
CME live cattle futures ended mixed on Friday, with nearby contracts weighed down by ample supplies of animals and by a weakening cash cattle market, although the market’s discount to cash prices limited losses, traders said.
Meanwhile, deferred-month cattle contracts were supported by positioning ahead of USDA’s monthly Cattle on Feed report, which was released after the close, they said.
Market-ready cattle at U.S. Plains feedlot markets traded this week from $108 to $110/cwt, compared to $110-$113 last week.
The USDA report showed ranchers in May drove more cattle into U.S. feedlots than expected compared with the same period a year ago, which could be mildly bearish to futures on Monday, analysts said.
CME August live cattle settled down 0.225 cent at 105.9 cents/lb. after failing to breach chart resistance at its 100-day moving average. Back-month contracts were up as much as 0.575 cent.
Feeder cattle futures ended higher, supported by cheap feed prices as corn futures hovered just above five-month lows reached earlier this week.
CME August feeders were up 0.725 cent at 149.2 cents/lb.
— Karl Plume reports on agriculture and commodities for Reuters from Chicago; additional reporting by Theopolis Waters in Chicago.Tagged cattle futures, cattle on feed, closing markets, CME, feeder cattle, hog futures, lean hog, live cattle, USDA