Chicago | Reuters — U.S. hog futures fell more than three per cent on Monday on profit-taking after a 14 per cent rally last week left futures over-priced relative to domestic cash prices, analysts said.
CME Group live cattle futures fell in response to a lower cash cattle trade late last week and spillover weakness from hogs.
Most-active CME October lean hog futures settled down 2.125 cents, or 3.6 per cent, at 56.475 cents/lb., snapping a five-session advance (all figures US$).
“They (hog futures) got over-bought. The basis levels got too extreme. The cash market is still under pressure,” said Don Roose, president of Iowa-based U.S. Commodities.
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To Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, there are two main reasons for recent increases for feed barley and wheat. Haley said on March 12 that there’s an ongoing lack of farmer selling, plus stiff competition from the grain companies looking to export barley.
The contract turned down after surging to a six-week high of 59.5 cents, fueled by optimism that a trade agreement with Mexico will be finalized in the coming days, and by concerns about a possible outbreak of African swine flu in China that could bolster export demand for pork.
China’s Ministry of Agriculture said on Sunday 88 hogs had died from African swine fever in the eastern city of Lianyungang, the third outbreak this month, as the highly contagious disease threatened to spread through the world’s biggest pig herd.
Live cattle futures were pressured in part by disappointment that cash cattle traded late Friday in Kansas and Texas at $109-$110.50/cwt, down from about $114 a week earlier.
CME August live cattle futures ended down 0.35 cent at 109.075 cents/lb. The most active October live cattle contract fell 0.425 cent to 110.45 cents.
CME August feeder cattle futures fell 1.325 cents to settle at 149.625 cents/lb. and September feeders were down 0.725 cent at 151.1 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
