U.S. livestock: CME hogs end quarter mostly higher on short-covering

Chicago | Reuters — The bulk of Chicago Mercantile Exchange lean hog contracts on Friday finished higher in the final trading session for the quarter, ignited by fund buying and short-covering, said traders.

They said futures rallied from earlier losses on Friday and prior to late Thursday’s U.S. Department of Agriculture quarterly hog report.

The report was mildly supportive for futures because most results were close to forecasts, but the data also confirmed continued herd growth, a bearish market factor, said analysts.

Investors will monitor slaughter-ready, or cash, hog prices that have declined for two month due to record-high hog slaughters.

“There is nothing in Thursday’s report that says that the cash market is going to do a 180 and turn up,” said U.S. Commodities analyst Don Roose.

In the midst of growing supplies, pork demand will draw interest as retailers prepare to feature product for National Pork Month in October.

Deferred hog futures received added support from fund buying after those contracts surpassed technical resistance levels.

Investors purchased back month hog futures and simultaneously sold the October contract ahead of its expiration on Oct. 13.

October hogs ended down 0.15 cent/lb. to 55.4 cents (all figures US$).

Most actively traded December finished 1.675 cents higher at 59.95 cents, and February closed 1.7 cents higher at 65.05 cents. Both contracts settled above their respective 40-day moving average of 59.595 and 64.356 cents.

Live cattle up, feeders down

CME live cattle gained for a third straight session, helped by end-of-quarter positioning as traders waited for remaining cash cattle to change hands.

October live cattle finished up 0.125 cent/lb. to 109.1 cents, and December closed up 0.2 cent, to 115.25 cents.

So far this week, a small number of cattle in Texas and Kansas brought $108/cwt, steady with a week ago. Other sellers in the U.S. Plains are holding out for at least $110.

“Packers are making good money and can afford to pay no worse than last week for supplies,” a trader said.

However, cattle numbers are plentiful and packers can soon draw from animals contracted against the futures market, said traders and analysts.

They also pointed out that beef demand might suffer during Pork Month, and grocers will soon consider promoting ham and turkey for the Thanksgiving, Christmas and New Year’s holidays.

Profit-taking and technical selling undercut CME feeder cattle contracts. October ended 0.725 cent/lb. lower at 152.225 cents.

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

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