CHICAGO, Oct 6 (Reuters) – Chicago Mercantile Exchange lean hogs closed higher on Thursday on short-covering and bargain buying after futures tumbled to a seven-year low on Wednesday, traders said.
CME October lean hogs, which will expire on Oct. 14, led advances due to a discount to the exchange’s hog index for Sept. 4 at 54.85 cents.
October closed up 2.150 cents per pound to 50.375 cents. Most-actively traded December ended up 1.725 cents to 43.175 cents.
Futures gained despite softer cash and wholesale pork prices due to seasonally abundant supplies.
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From Monday to Thursday packers processed 1.756 million hogs, 20,000 more than a year ago during the same period, according to U.S. Department of Agriculture estimates.
Slaughter-ready, or cash, hog prices in Iowa/Minnesota on Thursday afternoon slipped 11 cents per cwt from Wednesday to $47.24, the USDA said.
Separate USDA data on Thursday afternoon showed the wholesale pork price dropped 30 cents per cwt from Wednesday to $72.16.
Investors are keeping close tabs as the East Coast braces for Hurricane Matthew that could disrupt livestock production and meat demand in the region.
“The storm will probably hurt meat demand on the East Coast depending on how it plays out,” said David Maloni chief analyst with the American Restaurant Association. But, homes that may lose electricity will likely restock their refrigerators after power is restored, he said.
CME live cattle futures settled mixed after traders sold the October contract and simultaneously bought deferred months in a trading strategy known as bear spreading, said traders.
October ended down 0.425 cent per pound at 102.425 cents. December was up 0.050 cent to 103.100 cents, and February up 0.100 cent to 103.675 cents.
The October contract was in line with this week’s prices for slaughter-ready, or cash, cattle, a trader said. Sluggish wholesale beef demand further weighed on October futures, he added.
This week cash cattle in the U.S. Plains moved at $101 to $103 per cwt, steady to $3 lower from last week, said feedlot sources.
Thursday afternoon’s choice beef price fell 62 cents per cwt from Wednesday to $183.48. Select cuts were down $1.20 to $175.06, the U.S. government said.
CME feeder cattle closed mixed, supported by lower corn prices but pressured by back-month live cattle futures weakness.
October feeder cattle closed up 0.375 cent per pound to 127.825 cents, and November down 0.075 cent to 122.775 cents.
