Chicago | Reuters — Chicago Mercantile Exchange lean hog futures eased from a four-month top on Monday, pressured by uneasiness over burdensome supplies and tepid meat demand, said traders.
Technical selling and futures’ premiums to CME’s hog index for Dec. 14 at 64.11 cents further weighed on the market, they said (all figures US$).
February hogs ended 1.125 cents/lb. lower at 67.4 cents, and April finished 0.55 cent lower at 72.25 cents.
Both contracts closed below their respective 10-day moving averages of 68.088 and 72.468 cents.
“We are attempting to see how the market handles these huge slaughter numbers as far as the demand side goes for the pork,” said independent livestock futures trader Dan Norcini.
Packers paid less for plentiful hogs as plants look ahead to shutting down at least one day over the Christmas and New Year’s holidays, said analysts and traders.
They said retailers are purchasing small amounts of pork after nearly wrapping up year-end holiday business — especially hams.
Volatility in futures is anticipated as investors adjust positions before the upcoming holiday and the U.S. Department of Agriculture’s (USDA) quarterly hog report on Friday at 11 a.m. CT, traders and analysts said.
On Friday USDA will simultaneously release its monthly Cattle on Feed and cold storage reports.
Mostly weaker cattle futures
The bulk of CME’s live cattle contracts landed in modestly bearish territory in anticipation of increased supplies, said traders.
Monday’s higher wholesale beef values and last Friday’s better-than-expected cash cattle prices hoisted December futures above their 40-day moving average of 119.766 cents.
“Last week’s cash may be the high for the next several weeks,” David Hales, president of Hales Trading Co. wrote in his newsletter to clients.
December live cattle finished 1.075 cents/lb. higher at 119.975 cents. February ended 0.425 cent lower at 120.6 cents, and April closed down 0.125 cent at 122.025 cents.
Retailers on Monday may have bought beef to make sure they have enough inventory after packing plants close during the year-end holidays, a trader said.
Last week packers paid $118-$120/cwt for slaughter-ready, or cash, cattle that a week earlier fetched $115-$118.
This week’s cash price expectations vary given fewer animals for sale and packers not needing as many cattle because of holiday plant closures.
CME feeder cattle mimicked back-month live cattle market weakness.
January feeder cattle closed down 0.1 cent/lb. at 147.65 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.