Chicago | Reuters — Chicago Mercantile Exchange lean hog futures jumped nearly five per cent on Monday on bargain buying after the benchmark December contract on Friday dipped to its lowest in nearly three weeks, traders said.
CME December hogs settled up 4.075 cents at 87.05 cents/lb., surging in early moves after the contract was able to hold above Friday’s low of 82.825 cents (all figures US$). The December contract rose above its 50-, 100- and 200-day moving averages.
“Lean hog futures pushed sharply higher… largely on the back of a couple of spurts in purchases in what appears to have largely been technical buying as fund managers defend their positions, adding to them as prices rose above various technical points,” StoneX chief commodities economist Arlan Suderman wrote in a client note.
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Hog futures had become too cheap relative to cash prices, said Don Roose, president of Iowa-based U.S. Commodities. The CME lean hog index, a two-day weighted average of cash hog prices, declined to $91.45 per hundredweight (cwt), but that was still higher than December futures at the equivalent of about $87/cwt.
“The discount (to cash prices) is just too big,” Roose said.
Wholesale pork prices crept up after falling to a nine-month low last week. The U.S. Department of Agriculture quoted the U.S. pork carcass cutout value late Monday at $96.95/cwt, up 23 cents from Friday.
In the cattle markets, CME December live cattle settled up 1.4 cents at 153.05 cents per lb. Feeder cattle futures also firmed, with the most-active January contract up 0.3 cent at 179.925 cents/lb.
Wholesale beef prices rose. Choice cuts were up 80 cents at $264.55/cwt, USDA data showed. Select cuts rose $4.02, to $235.92/cwt.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
