Advertise in Print | Subscriptions
Published May 06, 2015, 02:51 PM

Bullish fundamentals extend CME hog futures gains

CHICAGO - Chicago Mercantile Exchange lean hog futures gained for a third straight session on Wednesday, backed by rising cash and wholesale pork prices, traders said.

By: Theopolis Waters, Reuters

CHICAGO - Chicago Mercantile Exchange lean hog futures gained for a third straight session on Wednesday, backed by rising cash and wholesale pork prices, traders said.

May hogs closed 1.350 cents higher at 80.350 cents per lb, and June was up 1.300 cents to 84.050 cents per lb.

Wednesday morning's average market-ready, or cash, hog price in Iowa/Minnesota rose 41 cents per cwt to $77.02 from Tuesday, according to the U.S. Department of Agriculture (USDA).

Separate USDA data showed the morning's wholesale pork price at $77.19 per cwt, $1.17 higher than on Tuesday.

"People are more inclined to expect sustained strength in the hogs going forward given improving pork demand and seasonally declining slaughter rates," said Doane Advisory Services economist Dan Vaught.

CME LIVE CATTLE RETREAT

Traders said profit-taking amid this week's cash price uncertainty pressured CME live cattle futures.

June ended 1.225 cents lower at 150.225 cents per lb, and August was down 0.975 cent to 148.925 cents per lb.

Cash bids surfaced on Wednesday in Kansas at $157 per cwt against $163 asking prices there and in Texas, industry sources said. Last week, cash cattle in the U.S. Plains sold at $160 to $163.

Processors who need inventory may pay the same as last week for cattle, traders said.

Other packers may cut kills to coincide with supplies bought last month for early May delivery and cattle contracted against the futures market, they said.

The USDA on Wednesday estimated that packers processed 106,000 head of cattle, 9,000 less than a week ago.

Despite the morning's wholesale beef price uptick, Tuesday afternoon's beef cutout setback may have set Wednesday's bearish futures' tone.

Wednesday morning's choice wholesale beef price, or cutout, was up $1.07 per cwt from Tuesday to $256.63 per cwt. Select cuts gained 64 cents to $244.24, the USDA said.

Tuesday's weaker cutout dispelled initial bullish sentiment that grocers are aggressively buying beef for Memorial Day features, said Vaught.

Funds sold, or rolled, their June long positions while at the same time they bought the August contract ahead of similar moves on the eve of the Standard & Poor's Goldman Sachs Commodity Index (S&PGSCI) roll.

The strategy, known as the S&PGSCI roll, will officially begin on Thursday and conclude on May 13.

CME feeder cattle felt pressure from the corn price rebound and live cattle market selling.

April closed down 0.875 cent per lb to 214.500 cents.

Tags: