Chicago | Reuters — Chicago Mercantile Exchange lean hog futures fell 3.8 per cent for their biggest daily loss in about a month on Wednesday, pulled down by investment fund selling tied to lower cash hog and wholesale pork prices, traders said.
Live cattle futures rose, extending gains to the fourth straight session on support from higher cash cattle prices, while feeder cattle futures were about flat.
Front-month CME April hogs tumbled 2.6 cents to 67.75 cents/lb., their lowest since Jan. 27 (all figures US$). The contract fell below its 50-day moving average for the first time since November.
“It’s hard to argue with the technicals when the funds start selling,” said independent hog trader Dan Norcini.
Hog futures had climbed to a roughly eight-month high on Feb. 8 but have trended lower since, with investment funds reducing their net long position on ideas of more plentiful supplies in the coming weeks.
“These guys think cash hog prices are going to take a beating,” Norcini added.
U.S. Department of Agriculture data released after the close of trading showed wholesale pork down $4.30, to $80.24/cwt. Prices for pork bellies that are sliced into bacon plunged $24.54 to $153.27 per cwt, about a one-month low.
Hogs traded 60 cents lower to an average of $72.95/cwt in Iowa and southern Minnesota, USDA said.
USDA on Thursday will release monthly cold storage data, including pork bellies. In January, USDA showed 17.8 million lbs. of bellies in storage, the smallest since 1957.
Cash cattle gains
Cattle traded as much as $5 per cwt higher in Texas and Nebraska cash markets, suggesting beef packers were short of supplies. Wholesale beef prices also rose, with choice-grade cuts gaining $2.72, to $194.53/cwt, according to USDA.
The higher cash cattle prices propelled futures higher.
Front-month February live cattle futures jumped 2.2 cents, to 121.3 cents/lb., touching the highest levels since March. Traders were rolling out of February cattle positions ahead of expiry on Feb. 28. Most-active April cattle touched the highest levels in about a month, settling up 0.775 cent, to 116.075 cents/lb.
CME March feeder cattle were up 0.4 cent, to 125.525 cents/lb.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.