U.S. livestock: Bargain buying rallies CME hogs

Chicago | Reuters — Chicago Mercantile Exchange lean hogs closed higher on Thursday after bargain buying lifted futures from four-month lows, said traders.

They said buy stops and deferred-month technical buying furthered market advances.

April hogs ended up 0.3 cent/lb. to 63.925 cents, and May 1.2 cents higher at 69.55 cents (all figures US$).

“We (futures) got cheap,” said independent hog futures trader Bill Cipolla. He cited futures’ selloff prior to and after last Thursday’s U.S. Department of Agriculture quarterly hog report.

USDA’s hog report showed a record-large hog herd as of March 1, which suggests plentiful supplies ahead.

Fallen cash hog and wholesale pork prices, as supplies grow seasonally, stirred bear spreads. The spreads consisted of investors who sold April futures and simultaneously bought deferred months.

Thursday afternoon’s average slaughter-ready, or cash, hog price in Iowa/Minnesota at $60.78/cwt fell 63 cents from Wednesday, USDA said.

U.S. government data on Thursday afternoon showed the average wholesale pork price at $74.11/cwt, down 76 cents from Wednesday, mostly due to $4.90 lower pork bellies.

USDA estimated Monday through Thursday’s total combined hog slaughter at 1.777 million head, up 5,000 from last week and 94,000 more than a year earlier.

Cattle futures turn up

CME live cattle pared recent losses with support from buy stops and futures’ discounts to expected cash prices this week, said traders.

April live cattle closed 0.525 cent/lb. higher at 118.8 cents, and June 0.7 cent higher at 110.125 cents.

Kansas and Nebraska packers tabled $122/cwt bids for cash cattle that were priced up to $130, said feedlot sources. Cash cattle in the U.S. Plains last week brought mostly $128-$130.

The fact that no cattle sold at Wednesday’s Fed Cattle Exchange suggests packers might have enough near-term supplies, a trader said.

Negative packer margins, tepid wholesale beef demand and more cattle for sale than last week are bearish cash influences, said traders and analysts.

Thursday afternoon’s average wholesale beef price fell $1.81/cwt to $207.90 from Wednesday. Select cuts were down 23 cents to $200.28, USDA said.

Thursday’s average beef packer margins were a negative $10.35 per head, down from a negative $3.40 for Wednesday, as calculated by HedgersEdge.com.

Technical buying and live cattle futures gains pulled up CME feeder cattle.

April feeder cattle closed 1.425 cents/lb. higher at 131.95 cents.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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