Chicago | Reuters –– Chicago Mercantile Exchange hog futures closed higher on Friday fueled by rising prices for market-ready, or cash, hogs and less concern about U.S. pork trade with Mexico, said traders.
On Thursday the Mexican government said it would allow some U.S. pork into the country duty-free under an import quota despite retaliatory measures taken this week after Washington hit Mexico with higher steel and aluminum tariffs.
“We (U.S.) move a lot of hams to Mexico, so this might offer some short-term relief,” a trader said.
Short-covering, improved wholesale pork demand and fund buying furthered CME hog market advances.
Packers scrambled for hogs amid a seasonal supply squeeze due to hot weather in parts of the U.S. Midwest that slowed animal weight gains, which typically delay delivery to packers, the trader said.
Wholesale pork values rose on Friday as grocers and restaurants gear up to feature product for Father’s Day on June 17, he added.
June hogs, which will expire on June 14, closed 1.475 cents/lb. higher at 79.875 cents (all figures US$). Most actively-traded July ended 1.275 cents higher at 80.725 cents, and above the 200-day moving average of 80.247 cents.
Rising beef prices boost cattle
CME live cattle posted steep gains, ignited by Friday’s higher wholesale beef prices and cash cattle price optimism, said traders.
Live cattle futures drew additional support from short-covering and technical buying, they said.
“Packers appear to be short bought…and they probably have pretty good advance beef orders to fill,” said Brock Associates Inc. analyst Doug Houghton.
Feedlots are unwilling to sell cattle for less money this week given historically high packer profits, said traders and analysts.
Packers want to buy market-ready, or cash, cattle in the U.S. Plains at around $110-$112/cwt, but feedlots are digging in at $114–$115. Last week, cash cattle in the Plains traded at mostly $110.
June live cattle closed up 1.65 cents/lb. at 110.025 cents, and above the 100-day moving average of 109.477 cents. August ended 1.625 cents higher at 105.775 cents.
Technical buying and live cattle futures gains drove up CME feeder cattle contracts.
August closed up 1.5 cents/lb. at 147.575 cents.
— Reporting for Reuters by Theopolis Waters in Chicago.