Chicago Mercantile Exchange hog futures closed lower on Thursday on profit-taking in response to steady to lower cash hog prices, traders and analysts said.
October hog futures finished down 0.9 cent at 92.8 cents per pound and December closed down 0.875 cent, at 87.725 cents (all figures US$).
Thursday afternoon cash hog prices in the western Midwest were unchanged from Wednesday at $92.30 per hundredweight (cwt) but were $1.98 lower at $89.64 in the eastern region, according to the U.S. Department of Agriculture.
Some packers lowered cash hog bids to protect operating margins. The move resulted in less fresh pork for retailers, which lifted the cutout value.
From Monday to Thursday, packers processed 1.711 million hogs, down 15,000 from last week and down 28,000 from a year earlier, USDA said.
Separate U.S. government data showed the wholesale pork price, or cutout, Thursday afternoon at $102.36/cwt, up $1.09 from Wednesday.
Traders adjusted positions ahead of the U.S. government’s quarterly hogs report on Friday.
Analysts expect the report to show fewer hogs were on U.S. farms on Sept. 1 due in part to the spread of the porcine epidemic diarrhea virus (PEDv). While virus-related swine deaths may lead to a near-term shortage of hogs, analysts expect production to increase in the longer term because of lower-cost feed.
Cash ideas support cattle
CME live cattle futures gained modestly in anticipation of steady-to-higher cash prices, analysts and traders said.
Fewer cattle for sale may pressure packers into spending more for supplies in spite of their negative margins and lacklustre beef demand, traders said.
Cash cattle in Texas and Kansas were bid $123/cwt versus asking prices of $127, feedlot sources said. Last week, cash cattle sold at $124 in those states and at $125 in Nebraska.
Beef packers on Thursday processed 118,000 head of cattle, down 3,000 from a week ago and down 11,000 from the same period last year, USDA said.
Production at the Creekstone Farms Premium beef packing plant in Arkansas City, Kansas, has been shutdown indefinitely after fire damaged part of the facility, said a city official on Thursday.
USDA data on Thursday afternoon showed the wholesale choice beef price, or cutout, at $193.60/cwt, up one cent from Wednesday. Select cuts slid 42 cents to $177.05.
October cattle futures closed up 0.15 cent/lb., to 127.7 cents. December rose 0.3 cent, to 131.575 cents.
Expectations of fewer feeder cattle ahead boosted CME feeder cattle futures.
Spot September feeder cattle, which expired on Thursday at noon CT, closed at 159.55 cents/lb., or 0.875 cent higher.
October feeder cattle , the new lead contract, ended 1.45 cents higher at 164.375 cents and November closed 1.1 cents higher at 165.15 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.