U.S. hogs turn lower amid premiums to cash

Chicago Mercantile Exchange (CME) hogs turned lower on Monday as the premium of futures to cash prices discouraged buyers, said traders and analysts.

CME’s lean hog index, a measure of cash hog values, was at 78.13 cents per pound. April hogs settled down 0.875 cent at 81.15 cents/lb., and June hogs fell 0.85 cent to 90.85 cents (all figures US$).

Lacklustre wholesale pork demand also weighed on futures.

And some investors cited discouraging January U.S. meat export data, which showed pork exports at 423.1 million lbs., down 3.3 million from December and down 78.8 million from January 2012.

China was the key drag on pork shipments at 29.3 million lbs. in January, 17 million less than the month before and 53.6 million below the year earlier amount.

Overall year-over-year U.S. pork export comparisons were made to an extremely large number last year, said Archer Financial Services broker Dennis Smith.

And the Chinese may be getting more comfortable buying less U.S. pork after building up their herds, he said.

Funds that follow the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI) sold April and bought months further out, shifting their spot-month long positions mainly into June and July. Monday was the third of five days for that roll.

Pork packers raised cash hog bids after wintry weather in the upper U.S. Midwest last weekend disrupted livestock production.

The U.S. Department of Agriculture late on Monday reported the average hog price in the most-watched Iowa/Minnesota market up $2.72 per hundredweight (cwt) at $74.56.

USDA estimated Monday’s slaughter at 418,000 hogs, 8,000 less than a week earlier.

And wholesale pork prices, or cutout, Monday evening rose 69 cents per cwt to $78.85, according to USDA.

"I’ve got to see more than a one-day bounce in cash and the cutout before being convinced that both markets are on the mend," a trader said.

Live cattle turn up

CME live cattle turned higher as anticipation for roughly steady cash cattle prices fuelled bullish spreads, analysts and traders said.

April live cattle closed at 128.125 cents/lb., up 0.575 cent. June was up 0.05 cent to 123.425 cents.

Traders expect cash cattle to trade steady with last week’s $128/cwt sales.

Cash values are challenged by mixed wholesale beef values that suggest grocers are reluctant to purchase product at current prices.

USDA data showed wholesale choice beef on Monday at $196.88/cwt, down 40 cents from Friday; select cuts were up 67 cents to $195.60.

Recent winter storms that crossed the Midwest delayed the marketing of cattle, resulting in a modest increase in the number of animals for sale this week.

Beef exports in January totaled 191.5 million lbs., down 5.9 million from December but up 9.3 million from a year ago.

CME feeder cattle settled mostly weak on bearish spreads and higher corn prices.

Spot March feeders settled 0.775 cent/lb. lower at 138.2 cents. Most-actively traded April ended at 141.375 cents, up 0.025 cent.

May futures closed down 0.1 cent at 143.75 cents.

— Theopolis Waters writes for Reuters from Chicago.

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