Chicago | Reuters — U.S. lean hog futures gained one per cent on Wednesday while live and feeder cattle each rose modestly, boosted by technical buying and good demand from meat packers ahead of Thursday’s U.S. Thanksgiving Day holiday, traders said.
Chicago Mercantile Exchange December lean hogs notched a two-month high, before finishing just below that peak, as investors bought back earlier short positions.
Average hog weights have declined two weeks in a row in the key market of Iowa and southern Minnesota, U.S. Department of Agriculture data showed, suggesting supplies were tightening slightly. Pork packers have aggressively bought animals to maintain robust profit margins and near-record slaughter rates.
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To Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, there are two main reasons for recent increases for feed barley and wheat. Haley said on March 12 that there’s an ongoing lack of farmer selling, plus stiff competition from the grain companies looking to export barley.
“Packer margins remain fantastic at more than $60 per head, which should help demand and underpin cash prices,” brokerage Brock + Associates said in a client note (all figures US$).
CME December hogs settled 0.45 cent higher at 49.75 cents/lb., below their session peak of 50.375 cents, the highest since Sept. 19. Most-active February lean hogs finished unchanged at 55.55 cents.
In cattle, there were expectations of higher trades in U.S. Plains cash markets, with beef packers also ramping up slaughter rates amid seasonally increased meat demand during the holidays.
Most slaughterhouses will be closed for Thursday’s holiday but likely will later boost slaughter rates to make up for the lost meat production.
CHS Hedging analyst Steve Wagner said cattle supplies available for slaughter were tightening, and feedlots were holding out for higher prices. “It’s been really slow and quiet when it comes to the cash (cattle market). That tells me prices should be higher,” he said.
Plains cash cattle traded lightly at $110-$112/cwt, above deals of $108-$110/cwt last week, traders said late on Wednesday.
CME December live cattle futures finished 0.325 cent higher at 109.675 cents/lb. and most-active February futures were up 0.625 cent at 110.8 cents/lb.
CME January feeder cattle were up 0.85 cent at 124.9 cents, rebounding from Tuesday’s roughly one-week low.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.
