Chicago | Reuters –– Chicago Mercantile Exchange lean hogs finished higher for a fifth straight session on Wednesday, helped by advances in cash and wholesale pork prices, traders said.
May closed 1.575 cents per pound higher at 75.325 cents, and June was up 1.3 cents at 81.2 cents (all figures US$).
The morning’s average market-ready (cash) hog price in Iowa/Minnesota surged $2.91 per hundredweight (cwt) from Tuesday to $71.48, the U.S. Department of Agriculture (USDA) said.
Separate USDA data showed the morning’s wholesale pork price climbed $1.30/cwt from Tuesday, to $72.32.
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Before last week, sliding cash prices discouraged farmers from feeding hogs heavier, which resulted fewer hogs now and at lighter weight.
Farmers were losing money on hogs and feeder pigs, so there was no reason for producers to grow them bigger when they needed to get hogs to market as fast as possible, a U.S. Midwest hog dealer said.
Packers hiked wholesale pork costs to offset higher cash prices, while trying to improve their razor-thin margins, analysts and traders said.
Mixed live cattle close
CME live cattle settled mixed after a volatile session, pressured by supply worries but supported by futures’ discounts to last week’s cash values, traders said.
April, which will expire on Thursday, ended down 0.2 cent/lb. at 160.8 cents, and June was 0.225 cent weaker at 150.9 cents. August closed 0.35 cent higher at 149.15 cents, and October was up 0.125 cent at 150.6 cents.
Cash bids in Kansas and Texas stood at $157/cwt against up to $163 asking prices, industry sources said. Last week, cash cattle in the U.S. Plains moved at $157 to $160.50.
Cash prices may garner support from processors who are taking advantage of their positive margins by throttling up production, traders said.
But the seasonal supply buildup, beef competition from cheaper pork and packers next week drawing from cattle contracted against the futures market may weigh on cash prices, they said.
“If the cash market breaks, the board (futures) will break but not as much. If cash finds stability and has a corrective rally, the board will rally even more as the basis weakens,” said CattleHedging.com president Larry Hicks.
Deferred-month live cattle gains and strong cash feeder cattle prices lifted CME feeder cattle futures.
April closed up 0.55 cent/lb. at 216.525 cents, and May 0.7 cent higher at 213.05 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.
