U.S. livestock: CME hog futures again reach new highs

Chicago | Reuters — Chicago Mercantile Exchange February lean hogs on Tuesday scored a fresh contract high, and deferred months scored new monthly tops, led by brisk wholesale pork demand cash price optimism, said traders.

February hogs ended 1.025 cents/lb. higher at 72.375 cents, and hit a new contract high of 72.8 cents (all figures US$). April ended 0.95 cent higher at 72.175 cents, its highest level since mid-June.

Tuesday morning’s U.S. Department of Agriculture data showed the average wholesale pork price, or cutout, climbed 92 cents/cwt to $86.05 from Monday, helped by $3 higher ribs.

Prices for slaughter-ready, or cash, hogs in the U.S. Midwest on Tuesday morning were steady to $1/cwt higher, according to regional hog merchants.

“You’ve got good pork demand and packer margins close to $30 per head. They (packers) have money to spend, so they’ve got room to buy hogs if they want them,” a Midwest hog dealer said.

He pinned higher pork cutout values on restaurant and grocery store meat purchases in preparation for Valentine’s Day dinner advertisements.

Higher live cattle close

CME live cattle futures closed higher, with strength from buy stops and technical buying, said traders.

February live cattle closed 1.25 cents/lb. higher at 117.675 cents, and April up 0.875 to 116.5 cents.

Both contracts punched through their respective 10-day moving average of 117.213 and 115.95 cents.

Investors focused on $116/cwt cash cattle bids in Texas and Kansas. They were consistent with bids there last week but down $3 from last week’s sales in the U.S. Plains.

Market bulls see early-week cash bids as a sign that some packers might be short on inventory.

Bearish traders expect packers will pay less for cattle by trimming slaughter rates, which could help improve their margins and lift wholesale beef values.

The trade awaits Wednesday’s Fed Cattle Auction of roughly 6,200 animals for cash price direction. Animals there last week brought $119/cwt.

HedgersEdge.com calculated Tuesday’s average beef packer margins at a negative $57.50 per head, up from negative $59.75 on Monday, as calculated by HedgersEdge.com.

Tuesday morning’s choice wholesale beef price was up 12 cents/cwt to $191.35. Select cuts dropped 71 cents, to $189.94, the USDA said.

CME live cattle futures buying and strong cash feeder cattle prices sent the exchange’s feeder cattle contracts higher.

March feeders closed up 0.7 cent/lb., to 124.225 cents.

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

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