U.S. livestock: CME hogs bounce back on bargain buying

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Chicago | Reuters — Chicago Mercantile Exchange hog futures finished higher on Tuesday after short-covering and bargain buying reversed recent market losses amid trade fears, analysts said.

Hog farmers in the U.S. may face another wave of higher tariffs by China, which placed stiff retaliatory duties on U.S. pork imports in early April.

CME hogs further benefited from their price value, or discount, to the exchange’s lean hog index for June 22 at 86.2 cents (all figures US$). The July contract gained traction after breaking through 100-day moving average resistance at 79.004 cents.

Still, bullish investors were skeptical that Tuesday’s advances would carry over into Wednesday as packers continue to lower bids for slaughter-ready, or cash, hogs to improve their margins.

The U.S. Department of Agriculture will issue its quarterly hog report on Thursday.

July hogs ended 1.05 cents/lb. higher at 79.125 cents. August closed 1.15 cents higher at 74.75 cents.

Live cattle settle weaker

CME live cattle posted modest losses amid softer wholesale beef values and caution ahead of prices for market-ready, or cash, cattle later this week, traders said. Technical selling and consolidation before the end of the quarter weighed on futures for most of the session, they said.

Market participants await the sale of 306 animals at Wednesday’s Fed Cattle Exchange auction. Cash cattle there last week brought $110/cwt.

Cash cattle elsewhere in the U.S. Plains sold from $108 to $110/cwt.

Bullish traders believe packers may pay about the same for cattle as last week given their historically high margins and fewer animals for sale.

Market bears cited a possible seasonal top in wholesale beef values and the prospect of increased supplies in the coming weeks.

Mechanical issues idled a beef packing plant in the Plains on Monday and Tuesday, traders said. The facility may operate on Wednesday and make up the downtime on Saturday, they said.

June live cattle closed down 0.05 cent/lb. at 105.925 cents, and below the 40-day moving average of 106.175 cents. August ended 0.475 cent lower at 102.425 cents.

Live cattle futures will resume the normal three-cent/lb. daily trading limit on Wednesday after failing to settle up or down Tuesday’s 4.5-cent expanded limit.

Short-covering underpinned CME feeder cattle contracts. August closed up 0.325 cent/lb. at 146.1 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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