Chicago | Reuters — Chicago Mercantile Exchange (CME) cattle futures extended their rally on Wednesday, as market hopes for continued gains in the cash market gave prices a strong boost, market analysts said.
CME lean hog futures in the nearby months turned lower, on signs of profit-taking and weakness in cash pork prices, traders said. Deferred contracts edged higher on short covering and hopes for improving demand.
CME most-active April lean hogs LHJ24 settled down 0.475 cent at 84.875 cents per pound, while June hogs LHM24 eased 0.475 cent at 101.725 cents per pound.
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Trades in the cash cattle market have been fairly slow so far this week, with one reported trade in Texas at $183 per hundredweight (cwt) – a price that was at least $2 per cwt lower than last week, according to traders.
But the lower-priced trade may have been due more to quality issues rather than a reflection of where the cash market is heading, they said.
Initial offerings from producers are expected to be at $186 per cwt or higher for live cattle this week, according to market research firm HedgersEdge.com LLC.
Still, beef packers have been dramatically cutting back the volume of cattle being slaughtered daily, as margins stay firmly in the red. The U.S. Department of Agriculture said meatpackers slaughtered an estimated 118,000 cattle on Wednesday, down 4.8 per cent from a week ago and nearly 6.2 per cent fewer than a year earlier.
The slow-down could reflect a lack of interest among packers to pay up for animals, or an effort to place pressure to lower prices in the cash market, traders said.
“I’m not sure how that’s going to work out for them,” said Rich Nelson, chief strategist at Allendale Inc.
CME benchmark April live cattle LCJ24 settled up 1.675 cents at 189.925 cents per pound. June live cattle LCM24 futures settled up 2.100 cents at 186.050 cents per pound.
CME April feeder cattle futures FCJ24 rose 1.725 cents, settling at 255.850 cents per pound.
