Chicago Mercantile Exchange hog futures rose on Tuesday with U.S. supermarkets buying pork for July 4 holiday demand, traders and analysts said.
Tuesday morning’s mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $105.79 per hundredweight (cwt), up $1.90 from Monday (all figures US$).
Tuesday’s pork price was the highest since the government began its mandatory pricing report in January. And based on USDA’s voluntary pork prices, which were replaced by the mandatory report, Wednesday’s wholesale price was the highest since $105.98 on Aug. 5, 2011.
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Chicago cattle futures surged on Tuesday to sit just under highs. Hog contracts also made gains.
“The cutout keeps marching higher while mixed cash hog prices could signal a near-term top soon,” a trader said.
Government data showed the average hog price on Tuesday morning in the western Midwest hog market at $98.94/cwt, down 75 cents from Monday.
Cash hog prices surged after last summer’s historic drought pushed feed costs to record highs. Those higher feed costs forced producers to reduce herds, resulting in fewer hogs now amid already tight seasonal supplies.
On Monday and Tuesday, packers processed 785,000 hogs, 8,000 less than a week ago, according to USDA estimates.
CME July hogs settled up 0.75 cents/lb., to 98.7 cents. August settled 0.65 cent higher, to 97.3.
Lower cash cattle sentiment
CME live cattle traders took profits after Monday’s rally in anticipation of lower cash prices, traders and analysts said.
Isolated cash cattle bids in the U.S. Plains surfaced at $116/cwt with no response from sellers, said feedlot sources. Cattle last week moved at $120, down $2 from the week before.
Processors bought fewer cattle in recent weeks, which increased current available supplies, a trader said. And choice beef values are struggling after hitting an all-time high of $211.37/cwt on May 23, he said.
USDA’s Tuesday morning data showed the wholesale price of choice beef down 53 cents/cwt from Monday to $200.66. Select cuts rose $1.16 to $185.19.
June live cattle finished down 0.325 cent/lb. to 119.5 cents, and August slipped 0.225 cent to 119.025 cents.
Weaker live cattle futures and higher corn prices pressured CME feeder cattle. Expensive feed could raise input costs for feedlot operators.
August settled down 0.725 cents per lb to 143.8 cents and September was at 146.225 cents, or 0.775 cent lower.
— Theopolis Waters reports for Reuters from Chicago.
