U.S. livestock: CME hogs settle mostly lower before USDA report

Chicago | Reuters — Most Chicago Mercantile Exchange lean hog contracts closed lower on Thursday, pressured by profit-taking ahead of the U.S. Department of Agriculture’s quarterly hog report at 2 p.m. CT.

“The industry will no doubt show herd expansion and record-large production, it’s just a question of how much,” said Archer Financial Services broker Dennis Smith.

Thursday morning’s modest uptick in prices for slaughter-ready or cash hogs, along with wholesale pork values, underpinned October hog futures, traders said.

Until Wednesday, hog prices have come down for more than two months, pressured by ample supplies of heavier animals, said analysts and traders.

They said solid U.S. export data further supported the October contract.

On Thursday, USDA’s export sales report for the week ended Sept. 21 showed U.S. pork sales at 36,700 tonnes, the highest this year, mostly to Mexico.

Exports is a necessary ingredient if the U.S. is going to keep hog prices from collapsing in the face of record-large production, said Smith.

October hogs ended up 0.15 cent/lb. to 55.55 cents (all figures US$). December finished 1.375 cents lower at 58.275 cents and February closed 1.05 cents lower at 63.35 cents.

Firmer cattle futures

CME live cattle gained slightly as bullishly cautious investors priced in the chance that packers might pay the same for cattle as last week, said traders.

October led other contracts after market participants periodically bought that month and simultaneously sold deferred contracts.

October live cattle finished 0.4 cent/lb. higher at 108.975 cents, and December closed up 0.15 cent to 115.05 cents.

On Thursday, Kansas processors raised cash bids to $106/cwt from $104 as sellers there and elsewhere in the U.S. Plains held out for at least $110. Cash cattle last week fetched $108-$109.

Packers are operating plants with excellent margins, but they seem less eager to buy cattle after purchasing a large number of them last week, a trader said.

He added that the late-summer seasonal decline in beef demand has stabilized, but could struggle to gain upward traction as hams and turkeys for the year-end holidays dominate meat industry discussions.

Slight live cattle futures gains lifted CME feeder cattle contracts. September, which expired at noon CT, settled up 0.375 cent/lb. to 152.775 cents. Most actively-traded October ended up 0.25 cent to 152.95 cents.

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

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