Chicago | Reuters — Chicago Mercantile Exchange hog futures soared to a new high on Tuesday after tight supplies forced packers to hike bids for market-ready animals, traders said.
CME live cattle futures also closed up sharply led by select beef prices that hit an all-time high amid tight supplies, the traders said.
Hog processors are trying to buy as many animals as they can before the July 4 holiday after the porcine epidemic diarrhea virus (PEDv) slowed down supplies, a Midwest hog dealer said.
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U.S. livestock: Feeder cattle extend rally to new highs
Chicago Mercantile Exchange feeder cattle futures extended gains to record highs on Wednesday while live cattle futures set a contract high before pulling back.
Tuesday afternoon’s average hog price in the Iowa/Minnesota market jumped $2.40 per hundredweight (cwt) from Monday to $126.56, the U.S. Department of Agriculture said (all figures US$).
Grocers are preparing to feature pork for summer barbecues, which lifted the cutout price and encouraged futures buyers, traders said.
The afternoon’s wholesale pork price, or cutout, climbed $1.77/cwt from Monday to $131.53, USDA said.
Fund buying and buy stops were triggered after futures moved beyond Monday’s highs.
Speculative buying ahead of USDA’s quarterly hog report on Friday contributed to CME hog futures advances. Analysts expect the report to show PEDv reduced the U.S. hog supply, while driving herd expansion to take advantage of high prices.
July hogs closed up 2.125 cents/lb. at 130.425, and August up 2.1 cents at 131.075 cents.
Live cattle up with beef prices
CME live cattle finished higher, with June futures up the three-cents maximum daily price limit, following record-high select beef values, traders and analysts said.
The afternoon’s wholesale price for choice beef was 89 cents/cwt higher at $243.66. Select beef hit $238.34 surpassing the previous record of $237.71 in March, according to USDA.
The price of select-grade wholesale beef notched an all-time high, fueled by a prolonged shortage of cattle and grocers gearing up for the summer grilling season, analysts said.
Futures’ initial discount to last week’s prices for slaughter-ready, or cash, cattle attracted buyers and stirred ideas of steady cash returns for this week.
Last week, cash cattle in Texas and Kansas traded at $150/cwt, and $148 to $150 in Nebraska.
August led advances after traders simultaneously bought that contract and sold June futures in a trading strategy known as bearish spreads.
June live cattle finished three cents/lb. higher at 150.15 cents, and August up 2.8 cents to 149.725 cents.
CME feeder cattle set a new high, supported by higher live cattle futures, fund buying and tight feeder cattle supplies.
“The entire drawdown on the herd cuts down the amount of available feeders,” said Citigroup futures specialist Sterling Smith.
August closed up 2.725 cents/lb. at 210.625 cents, and September at 212.2 cents, 2.9 cents higher.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.
