CHICAGO, Aug 11 (Reuters) – U.S. lean hog futures fell sharply on Thursday, reversing from earlier steep gains on pressure from declining pork prices and ample hog supplies, traders and analysts said.
The price action suggested that hog futures would likely test their life-of-contract lows reached on Aug. 4 when trading resumes on Friday, analysts said.
Live and feeder cattle futures also were lower at the Chicago Mercantile Exchange, but cattle prices trimmed earlier losses in moves that were seen as positive for chart-based traders, possibly portending future gains.
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Most-active CME October lean hog futures finished 0.550 cent lower at 58.425 cents per lb, in heavy trading volume of more than 23,000 contracts. The contract earlier in the session reached a roughly 1-1/2-week high of 61.450 and was holding above its lifetime low of 57.575 cents despite the drop.
Declining prices for pork, including a tumble in pork belly values, further weighed on hogs which have declined for weeks amid outlooks for record-large U.S. hog and pork production.
“I think contract lows get taken out,” Top Third Ag Marketing analyst Craig VanDyke said, suggesting that hogs could reach new lows on Friday. “On a weekly (chart), this would be downright ugly.
CME October live cattle settled 0.375 cent lower at 114.550 cents per lb. CME September feeder cattle fell 1.525 cents to 146.975 cents per lb, for their largest daily losses so far this month.
Beef packers scaled back bids to buy slaughter-weight cattle earlier in the session, sparking a selloff in futures before a round of technical buying lifted prices from their lows.
Cattle traders still were waiting for U.S. Plains cash cattle trading to develop after higher trades last week boosted futures.
