Chicago | Reuters — Capping yet another day of volatile livestock trading, Chicago Mercantile Exchange hogs closed down Thursday, recovering somewhat after prices went limit-down midday in response to ongoing uncertainty over the impact of a deadly swine virus on the nation’s hog herd.
In contrast, fears over tight beef and cattle supplies in the U.S. sent CME feeder and live cattle prices soaring. Most-active May feeder cattle hit a contract high mid-session, and all months but April hit contract highs in electronic trading.
Fund selling and sell-stops developed after the May hogs fell to 122.75 cents on worries of lower wholesale pork values (all figures US$). May hogs closed down 2.25 cents per pound to 123.5, while April hogs closed down 1.25 cents/lb. at 125.75. June hogs finished 1.25 cents/lb. lower at 123.55.
Hog futures initially plummeted in part due to confusion in the cash market with talk of packers appearing to pay less for lean hog carcasses, but paying more for live-weight hogs, said independent livestock futures trader Dan Norcini.
According to U.S. Department of Agriculture data, packers paid 88 cents per hundredweight (cwt) higher for live hogs on Thursday morning, but paid $2/cwt less for lean hog carcasses.
“Normally, the prices follow each other,” Norcini said. “This market has been so volatile that when you see a break in any trend, or when you see the packers stop putting more money on the table for hogs, the ship begins to sink.”
Traders predicted that sharply lower wholesale prices released by USDA on Thursday afternoon could put further pressure on prices in the cash hog market in the coming days, and prompt sales of nearby lean hog futures contracts.
Cattle turn up on supply worries
CME live and feeder cattle prices jumped during midday trading on Thursday, supported in part by funds and traders feeling that the mature corn price rally may be losing steam.
“What’s happening now is we’re seeing the green light to buy (feeder cattle contracts), at least in the short-term,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
In the cash market, cattle bids remained at $147/cwt in the U.S. Plains against sellers’ asking prices of $153/cwt, according to a feedlot source. Last week, cash cattle in Texas and Kansas commanded a record high of $152/cwt, and Nebraska cash cattle hit a $154 record, feedlot sources said.
April live cattle closed up 0.55 cent/lb. at 145.15 cents, while June ended up 0.6 cent/lb. at 137.375 cents and August finished 0.275 cent/lb. higher at 134.75 cents.
April feeder cattle closed up 1.6 cents/lb. higher at 178.825 cents, and May ended 2.175 cents higher at 180.15 cents.
— P.J. Huffstutter reports on the agriculture sector for Reuters from Chicago.