U.S. livestock: Hog futures rise as cash values firm

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Chicago | Reuters — U.S. lean hog futures rose on Wednesday, reaching a four-month high on firming cash hog prices, optimism about pork demand and technical buying, analysts said.

The Chicago Mercantile Exchange October lean hog futures contract settled above its 200-day moving average, rising 1.475 cents to end at 61.375 cents/lb. after reaching 61.725 cents, its highest since April 28 (all figures US$).

Cash hog prices in the Iowa and southern Minnesota market jumped by $4.98/cwt on Wednesday and the average U.S. negotiated cash price rose $3.49, according to the U.S. Department of Agriculture.

“The cash market is looking strong. The question is whether the pork market can keep up, in order to keep packer margins strong,” said Doug Houghton, analyst with Brock Associates.

Wholesale pork prices showed mixed signals. The U.S. pork cutout value was up $2.72/cwt from Tuesday in USDA’s mid-morning report, which helped lift CME hog futures. But the government’s afternoon revision, released after the CME close, showed the cutout down 78 cents from Tuesday.

On the export front, the last two weekly USDA export sales reports have shown robust U.S. pork sales, especially to top global buyer China. USDA’s next weekly export sales report is due Friday, delayed a day due to Monday’s federal holiday.

CME live cattle futures closed lower on a disappointing start to cash cattle trade, despite strong packer margins. Market-ready cattle traded in Nebraska at $101/cwt, down $1-$2 from the bulk of last week’s trade, USDA said.

Softer wholesale beef prices added pressure. The choice boxed beef cutout value fell on Wednesday afternoon to $222.95/cwt, down $1.87 from Tuesday and down $2.90 from Friday.

“The boxed beef cutout values … got no apparent bounce from Labour Day, so that is certainly not a positive factor,” Houghton said.

CME October live cattle futures settled down 1.075 cents at 104.7 cents/lb. October feeder cattle futures ended down 1.6 cents at 138.25 cents/lb.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.