U. S. hog futures closed at their highest level in six weeks at the Chicago Mercantile Exchange Nov. 28 as investors believe the flood of hogs that hit the market this fall is abating, which should mean higher cash markets in the weeks ahead.
Cattle futures finished lower, largely the victim of selling by investors who needed to balance accounts for month-end bookkeeping.
Trading was light in all of the CME livestock markets, with many traders staying home for a four-day holiday. The CME markets were closed on Nov. 27 for the U. S. Thanksgiving holiday and closed an hour early on Nov. 28.
While much of the trading in hogs involved month-end short covering, futures were helped by forecasts for fewer hogs in the weeks and months ahead as well as by firm pork prices, traders said.
“It looks like we have switched to below year-ago numbers on the slaughter,” Rich Nelson, analyst at Allendale Inc., said of some daily hog slaughter data seen this week.
Huge numbers of hogs hit the market this fall, but now Nelson and some traders believed the largest of those supplies were in the past.
“I think we could start seeing some strength on the cash hogs,” he said.
In addition, bullish traders were encouraged by two days of strong gains in cash pork prices, an indication that demand may be improving. There was a swift drop in pork prices earlier this fall, which fuelled talk of slowing exports due to weak global economies.
USDA on Nov. 26 reported the average wholesale pork prices was $58.85 per cwt, up $2.41 from the previous week.
Trading in cattle futures was also light, with many traders absent and others content to buy or sell to balance accounts for end-of-the-month books.
Futures remain at a discount to this week’s $90 cash market. However, that did not appear to be an important concern to traders, who were more interested in balancing accounts and going home.
The $90 cash sales, which is the same as 90-cent-per-lb. futures, last week were up $2 to $3 from the previous week.