Chicago | Reuters — Chicago Mercantile Exchange lean hogs climbed four per cent on Tuesday, pulled up by short-covering following the recent bump in cash prices that may have ended their two-week losing streak, traders said.
Spot October ended up 2.55 cents/lb. at 69.375, and December 1.6 cents higher at 63.85 (all figures US$).
Tuesday morning’s average cash hog price in the western U.S. corn belt was at $66.55/cwt on light volume, up 42 cents from Monday, the U.S. Department of Agriculture said.
Packers are looking for hogs for later this week, which suggests that supplies may not be as big as anticipated, an Indiana hog dealer said.
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Still, futures traders and dealers are mindful that the onset of cooler weather in parts of the country could usher in the seasonal increase in hog numbers.
Fund buying erupted after the October and December contracts punched through their respective 10-day moving averages of 68.62 and 63.45 cents, which also triggered buy stops.
In a trading strategy known as bull spreading, traders bought nearby contracts and sold deferred months in the hope of temporary cash price relief.
Investors are tracking pork sales as supermarkets build inventories for National Pork Month in October.
Tuesday morning’s wholesale pork price fell 56 cents/cwt from Monday to $84.24, according to USDA.
Live cattle market sags
CME live cattle finished lower after profit-taking and soft wholesale beef values trimmed early-session gains and threatened to pressure cash prices later this week, traders said.
Spot-October closed down 0.875 cent/lb. at 140.6 cents, and December one cent lower at 142.175 cents.
Tuesday morning’s wholesale choice beef price shed 16 cents/cwt, to $234.98 from Monday. Select cuts were down 22 cents, to $225.47, USDA said.
Last week, market-ready (cash) cattle in the U.S. Plains fetched $139-$142/cwt.
While profitable packer margins and fewer cattle for sale are supportive for cash prices, record-heavy cattle weights and seasonally slack beef demand are bearish cash influences.
“We’ve had a real struggle with heavy cattle in the northern Plains, and the big debate is when are those cattle cleaning up,” said U.S. Commodities analyst Don Roose.
CME live cattle losses and a steep drop in cash feeder cattle prices sank the exchange’s feeder cattle contract to a seven month low. September closed 1.825 cent lower at 198.325 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
