Chicago | Reuters — Chicago Mercantile Exchange hog futures ended lower on Friday, pressured by weaker prices for market-ready, or cash, hogs, with packing plants set to close on Memorial Day, traders said.
The CME also will be closed on Monday in observance of the U.S. Memorial Day holiday.
Cash hog prices felt more pressure after processors cut slaughters to offset production lost from the porcine epidemic diarrhea virus.
Friday morning’s hog price in the Iowa/Minnesota market slipped 49 cents per hundredweight (cwt) from Thursday to $107.90, the U.S. Department of Agriculture said (all figures US$).
“We’re still waiting on the cash market to turn up. It has not done that, and that’s where all the pressure has been,” said Archer Financial Services broker Dennis Smith.
Futures’ price premium to CME’s hog index, at 111.72 cents, deterred buyers.
Fund liquidation and sell stops exacerbated hog market losses.
Traders will see on Tuesday if cash hog prices can mount a comeback as packers buy animals to make up for Monday’s holiday downtime, a trader said.
At issue is whether some of those hogs backed up on farms during the three-day holiday weekend might continue to pressure cash hog returns in the near term, he said.
June hogs closed 0.75 cent per pound lower at 116.85, and July down 1.6 cents at 123.725.
Funds pressure live cattle
CME live cattle futures fell on fund selling and profit-taking before the long holiday weekend, traders said.
They cited this week’s lower cash cattle prices and Friday morning’s slip in the beef cutout price.
On Thursday, cash cattle in Texas and Kansas moved at $144/cwt, $1 lower than last week, feedlot sources said. Cash cattle in Nebraska fetched $145 to $146.50, down 50 cents to $2 from a week ago.
The morning’s wholesale choice beef price dipped 19 cents/cwt from Thursday to $231.60. Select cuts declined 22 cents to $220.94, based on USDA data.
Packers finished buying cattle for the holiday-shortened work week. Grocers may hold off booking large amounts of beef until they gauge how much product sold during the holiday.
CME live cattle may trade mixed on Tuesday, a trader said.
Market bulls could ponder futures’ discount to this week’s cash prices, while bears may bet on a long-awaited seasonal increase in supplies, he said.
June ended at 136.300 cents, 1.3 cents lower. August down 1.525 cents at 137.125 cents.
CME feeder cattle fell sharply, dragged down by fund liquidation and the live cattle market selloff.
August ended 2.525 cents lower at 192.85 cents, and September 2.4 cents lower at 194.15.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.