Chicago Mercantile Exchange hogs ended lower for a third straight session on Monday, pressured by weaker cash hog and wholesale pork prices.
December hogs closed 0.475 cent per lb lower at
87.475 cents and February finished at 89.650 cents, down
U.S. Department of Agriculture data on Monday morning showed the average price of hogs in the eastern Midwest market at $87.27 per hundredweight (cwt), down $1.68 from Friday. Hog prices in other parts of the Midwest were unavailable.
The wholesale pork price, or cutout, was at $94.12 per cwt on Monday morning, down 18 cents from Friday.
Packers will resist raising cash hog bids given their thin operating margins and plentiful supplies.
Nutrient-rich newly harvested corn and cool fall weather are allowing hogs to put on weight quickly, making them readily available for processors.
Margins for U.S. pork packers on Monday were estimated at a positive $0.95 per head, compared with a positive $5.40 on Friday and a positive $6.00 a week ago, according to HedgersEdge.com.
Investors await the release on Tuesday of CME’s first lean hog index since the exchange suspended the data due to the partial U.S. government shutdown.
Two-sided live cattle trade
CME live cattle settled mixed after a quiet day of trading on Monday.
October futures gained with higher beef prices that stirred expectations for at least steady cash prices for this week, traders said.
They said futures’ modest premiums to last week’s cash cattle prices and profit taking pressured the CME live cattle December contract.
Live cattle October closed up 0.250 cent per lb at
130.125 cents. December finished at 131.900 cents, down
0.125 cent and below the 20-day moving average of 132.10 cents.
The number of cattle available for sale is down slightly from last week, which is supportive to cash prices. But some packers reduced slaughter to boost wholesale beef prices and help pull their margins out of the red.
A few feedlots in the U.S. Plains have priced their cattle at $131 per cwt with no response from buyers, feedlot sources said.
Possible sales of $131 this week would surpass the previous record high of $130 for the week ended March 2, 2012. Last week, cattle moved at mostly $129 to $130.
“I believe that packers will be very reluctant to pay over $130 as they are losing money and the market (cash) has never been able to hold over $130 in the past,” Oak Investment Group President Joe Ocrant said.
Monday morning’s average wholesale choice beef price, or cutout, was at $197.98 per cwt, up $1.69 from Friday. Select cuts rose $1.04 to $181.02.
Estimated margins for U.S. beef packers on Monday were a negative $55.35 per head, compared with a negative $44.30 on Friday and a negative $37.40 a week ago, according to HedgersEdge.com.
USDA delayed its monthly cattle-on-feed report, which was originally scheduled for Oct. 18, to Oct. 31. The government will also postpone its cold storage report from Oct. 22 also to Oct. 31.
CME feeder cattle finished down slightly on firm corn prices and weak deferred-month CME live cattle futures. October closed at 165.825 cents per lb, 0.250 cent lower, while November slipped 0.450 cent to 166.400 cents.