Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose to contract highs for a third straight session on Friday on hopes for strong demand from China before easing from those peaks on profit-taking and technical selling, traders said.
China is expected to be in the market for imported pork as the deadly hog disease African swine fever has decimated the country’s domestic herd.
Hog futures surged by their daily trading limits on Wednesday and Thursday so the market was due for a pullback.
“The trade, as overbought as we are, could cool off heading into next week,” said Matthew Wiegand, broker with FuturesOne.
“That said, there’s always the possibility of more big pork export sales to China or some news on the trade front that can get another rally going.”
CME April lean hogs ended unchanged at 78.325 cents/lb. after setting a contract high of 80.3 cents (all figures US$). June hogs rallied to a contract high of 97.825 cents but settled 0.925 cent higher at 95.675 cents.
Live cattle futures ended mixed, with nearby contracts down slightly and deferred months modestly higher.
Traders said beef prices may have reached a near term peak as choice cuts were quoted 22 cents lower on Friday at $229.09/cwt, according to the U.S. Department of Agriculture.
Spot April futures held close to cash market prices. Feedlot cattle in the U.S. Plains traded about $1-$2 higher on Friday at $128-$129/cwt. The lower prices were in Texas and Kansas, traders said.
CME April live cattle futures ended down 0.175 cent at 129.725 cents/lb. while the June contract fell 0.4 cent, to 123.5 cents. Deferred contracts were steady to up 0.4 cent.
April feeder cattle futures were 0.125 cent lower at 148.8 cents/lb.
After the close on Friday, USDA said on-feed cattle supplies on March 1 were 101 per cent of a year ago, above trade estimates for a moderate decline.
Cattle marketings in February were at 100 per cent of last year, versus estimates for 101.5 per cent, while placements were 102 per cent of a year earlier, compared with the average trade estimate for 96.2 per cent.
The higher on-feed and placements figures, and the lower marketings, could pressure cattle futures at the open on Monday, traders said.
In a separate report, USDA said stocks of beef and pork in cold storage above prior-year levels, which could also drag on futures.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.