Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures rallied on Thursday on short-covering and position squaring near the end of the month and quarter after prices hit multi-month lows earlier this week, traders said.
Investors also squared bets ahead of the U.S. Department of Agriculture’s (USDA) quarterly hog and pig supply report, released after the close, which showed a continued herd expansion that was near trade expectations.
Ample supplies of hogs and pork have overshadowed hog futures in recent months and prompted commodity funds to slash their long bets and build up short positions.
“Tomorrow is the end of the month, end of the quarter. The funds have been pounding this hog market lower for at least the last six weeks so this turn was short-covering heading into this (quarterly hog supply) number,” said Jeff French, analyst with Top Third Ag Marketing.
“But I don’t see anything this number to go ahead and start a bull market. It shows that this market is still full expansion mode,” he said.
USDA said the U.S. hog herd on June 1 was up 3.6 per cent from a year earlier, above estimates for a three per cent rise. The number of hogs kept for breeding increased 1.4 per cent, versus estimates for a 2.1 per cent rise, while hogs kept for marketing jumped 3.9 per cent, above estimates for a 3.1 per cent rise.
CME July lean hogs were up 0.275 cent at 73.825 cents/lb. while actively traded August gained 1.7 cents, to 77.175 cents/lb.
Hog prices were underpinned by solid U.S. pork export sales last week totaling 29,700 tonnes, including 10,400 tonnes sold to China, the most in three weeks, according to USDA data.
China is expected to import much more pork this year as its domestic hog herd has been decimated by African swine fever. U.S. pork shipments have accelerated, but volumes have thus far been below expectations.
Live cattle futures ended slightly weaker in most contracts in a mild profit-taking pullback after early week gains.
Actively traded CME August live cattle ended down 0.025 cent at 105.35 cents/lb. Spot June futures, which expire at the end of the week, were up 1.575 cents at 110.575 cents/lb., reflecting market expectations for steady cash cattle prices this week.
Feeder cattle also eased after surging on technical buying and short covering a day earlier.
CME August feeder cattle dipped 0.025 cent to 135.8 cents/lb.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.