U.S. livestock: Burdensome supply worries drag down CME hog futures

Chicago/Reuters – Chicago Mercantile Exchange lean hogs closed lower on Friday as hefty supplies continued to pressure cash and wholesale pork values, traders and analysts said.

August ended down 1.175 cents per lb at 78.500 cents, and October 1.975 cents lower at 63.725 cents.

Market-ready, or cash, hogs in the western Midwest sold at $73.63 per cwt on average in light volume on Friday morning, $2.38 lower than on Thursday, the U.S. Department of Agriculture said.

The USDA reported the morning’s wholesale pork price at $85.38 per cwt, 85 cents weaker than on Thursday following an almost $5 slump in hams.

This week packers are on track to slaughter 2.137 million hogs, 36,000 more than a week ago, according to government data.

“We’ve got big supplies coming at us, and big supplies are still here through the summer,” said U.S. Commodities analyst Don Roose.

Losses for August and October mounted after they fell below their respective 100-day and 20-day moving averages of 78.51 cents and 64.27 cents, which ignited fund liquidation and sell stops.

Cattle mostly weak, await cash sales

Most CME live cattle contracts finished in negative territory after traders sold deferred months and bought August in anticipation of higher cash prices this week, traders said.

August closed up 0.475 cent per lb higher at 145.700 cents, October ended down 0.525 cent at 145.925 cents and December 0.675 cent lower at 147.450 cents.

Cash bids in the U.S. Plains were at $145 to $146 against as much as $150 asking prices, feedlot sources said. A week ago, cash cattle in the U.S. Plains moved at $145 to $146 per cwt.

It appears the wholesale beef and cash prices may be putting in a seasonal bottom this week, helped by improved packer margins, said Roose.

But the government has predicted “very lofty” numbers in the fourth quarter, which pressured back months, he said.

Beef processor margins for Friday were at a negative $4.51 per head, compared with a negative $18.49 on Thursday, as calculated by HedgersEdge.com.

The morning’s wholesale choice beef price was at $233.27 per cwt, down 7 cents from Thursday. Select cuts were up 37 cents to $229.690, the USDA said.

CME feeder cattle contracts felt pressure from end-of-month profit-taking and back-month live cattle selling.

August closed 0.500 cent per lb lower at 210.725 cents.

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