Chicago | Reuters –– Chicago Mercantile Exchange lean hogs tumbled more than two per cent on Thursday following the morning’s cash hog and wholesale pork price retreat, traders said.
Spot-August futures finished 2.15 cents/lb. lower at 78.075 cents, and most-active October down 2.325 cents at 64.45 cents (all figures US$).
Thursday morning’s average market-ready (cash) hog price in Iowa/Minnesota had fallen almost $6/cwt from Wednesday in light volume, to $71.10, the U.S. Department of Agriculture said.
The morning’s wholesale pork price (cutout) was at $87.73/cwt, $1.39 lower than on Wednesday, hit by a more than a $6 pullback in pork bellies, according to USDA.
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“People are watching bellies closely because they make up a huge part of the cutout value this time of year as demand for bacon-lettuce-tomato sandwiches heat up,” a trader said.
USDA’s report showed a steep cash price drop due to ample supplies, but investors have a hard time trusting the morning data because of the small sampling of packers involved, he said.
Technical selling and sell stops, along with concern about increased hog numbers ahead, accelerated futures losses.
Cattle finish higher
CME live cattle drew support from expectations that packers may spend the same or more for cash cattle this week, traders and analysts said.
Spot-August futures closed 1.05 cents/lb. higher at 149.725 cents, and October up 0.675 cent at 148.85 cents.
Cash bids in the U.S. Plains held at $145-$147/cwt against mostly $151-$153 asking prices, feedlot sources said. Cash cattle a week ago fetched $147-$149.
“We’re all excited about the cash prospects,” Schwieterman Inc. broker Domenic Varricchio said.
Now positive packer margins and around 12,000 fewer cattle than last week for sale are fueling this week’s cash price optimism, although beef demand continued to sputter.
Thursday morning’s wholesale choice beef price slipped 11 cents/cwt from Wednesday, to $235.10/cwt. Select cuts were down 60 cents, to $228.25, USDA said.
Beef processor margins for Thursday were at a positive $3 per head, compared with a negative $5.65 on Wednesday and a negative $18.49 a week ago, as calculated by HedgersEdge.com.
CME August live cattle opened above the 100-day moving average of 148.96 cents, which sparked fund buying.
Weak corn prices and live cattle futures buying boosted CME feeder cattle contracts.
August finished up 0.85 cent/lb., at 214.975 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
