Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose on Thursday, hitting their highest level in two months led by steadily climbing prices for market-ready, or cash, hogs as packers competed for supplies, said traders.
December hogs finished 0.5 cent/lb. higher at 64.250 cents, and February ended 0.475 cent higher at 68.475 cent (all figures US$).
Daily hog slaughters have consistently made new records, partly because new pork processing plants in operation are buying animals to maintain market share and make good on meat orders, a trader said.
Soon farmers may be faced with less money for their hogs as higher prices for them wear down packer profits, and retailers switch to promoting more beef following the conclusion of National Pork Month, a trader said.
Live cattle soft before report
Nearby CME live cattle settled modestly lower, pressured by this week’s less-than-expected cash prices and caution before the U.S. Department of Agriculture’s monthly Cattle on Feed report on Friday, said traders.
“The market was just biding time until Friday’s report,” said Oak Investment Group President Joe Ocrant.
October live cattle, which will expire on Oct. 31, finished 0.275 cent/lb. lower at 111.2 cents. Most actively-traded December closed down 0.5 cent, to 116.15 cents.
This week packers paid mostly $110/cwt for cash cattle in the U.S. Plains that a week earlier moved at $111, said feedlot sources.
Processors balked at paying more for supplies after two or three weeks of higher cash prices trimmed their margins, although those profits remain high historically, said analysts and traders.
They said processors have ample supplies now, but those numbers could decline after some ranchers and feedlots moved animals to market ahead of schedule to avoid possibly lower prices in the weeks ahead.
Buy stops and technical buying pulled up CME feeder cattle contracts. Feeder cattle futures’ discounts to CME’s feeder cattle index for Oct. 18 at 155.08 cents provided added market support.
October ended up 0.625 cent/lb. to 153.15 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.