Chicago Mercantile Exchange hog futures on Thursday fell to an eight-month low, pressured by fund selling and weaker cash hog prices, traders said.
The U.S. Department of Agriculture on Thursday afternoon quoted the closely watched Iowa/Minnesota hog market at $77.70 per hundredweight (cwt), down $1.08 from Wednesday (all figures US$).
Hog supplies have increased at a time when record heavy hog weights have created ample pork product in the meat pipeline, said Dan Norcini, an independent livestock futures trader.
“Quite frankly, packers do not need to chase hogs in that environment,” Norcini said.
Spot December hogs led declines as traders sold the contract and bought deferred months before the spot month expires on Dec. 17.
Speculative buying tied to the potential decline in production in 2014 due to the porcine epidemic diarrhea virus (PEDv), a fatal disease for baby pigs, limited deferred-month hog futures losses.
CME livestock traders are eyeing a strong winter storm that on Thursday brought arctic temperatures and blowing snow to portions of the U.S. Plains and Midwest.
The wintry weather will continue to be monitored as freezing temperatures can slow animal weight gain and snarl transportation of livestock to market.
“So far, the storm appears to be more of a cold weather issue than a snowfall problem for most of cattle country,” a Nebraska feedlot source said.
There were no disruptions to production at major U.S. beef and pork packing plants in the region on Thursday, according to industry sources.
Spot December hogs ended down 1.37 per cent, or 1.15 cents, at 82.525 cents per pound. February hogs closed down 0.325 cent, or 0.37 per cent, at 88.675 cents.
Live cattle price in cash sales
CME live cattle futures drifted from session highs as cash prices came in steady with last week’s sales, traders and analysts said.
On Thursday, cash cattle in Texas and Kansas moved at $132/cwt, which was consistent with last week’s sales in both states, feedlot sources said.
Traders await cash trades in Nebraska where bids of $130 were reported against asking prices of $133 and higher, a feedlot source said. Last week, cash cattle in Nebraska fetched mostly $133, he said.
Beef processors resisted paying higher prices for supplies as their margins remained firmly in the red and beef demand slowed recently.
Beef packer margins on Thursday were at a negative $27.95, compared with a negative $27.60 on Wednesday, according to HedgersEdge.com.
USDA’s Thursday afternoon wholesale beef price was $202.41/cwt for choice cuts, down 89 cents from Wednesday. Select cuts slipped 42 cents to $189.62.
Supermarkets are reluctant to book large amounts of fresh beef as consumers focus on Christmas holiday gift giving, a trader said.
December live cattle futures settled down 1.075 cents at 131.65 cents/lb. February cattle settled down 1.525 cents at 132.9 cents.
Feeder cattle futures followed live cattle futures lower.
January feeder cattle settled down 0.925 cent at 164.125 cents/lb., and March ended down 0.925 cent, at 164.425 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.