CHICAGO, Sept 13 (Reuters) – Chicago Mercantile Exchange lean hogs on Tuesday posted losses for a third straight session as plentiful supplies pressured cash prices, traders said.
They said liquidation in other commodities led by the U.S. stock market selloff further weighed on CME lean hogs.
October closed 2.675 cents per pound lower at 56.750 cents and posted a fresh contract low of 56.575 cents. December ended down 2.475 cents to 50.550 cents and made a new low of 50.300 cents.
Some investors blamed hog futures’ bearish tone on selling in the nearby cattle markets. But others said the cloud hanging over the hog market has more to with an abundance of pigs as cooler temperatures causes them to grow quicker.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
“We’re going to kill about 2.4 million hogs this week and it won’t have anything to do with cattle. We’ve just got too many of them (hogs),” a Midwest hog merchant said.
Monday and Tuesday’s combined hog slaughter totaled 877,000 head, 11,000 more than a year ago, according to U.S. Department of Agriculture estimates.
The government reported Tuesday morning’s average cash hog price in the western Corn Belt fell $1.32 per cwt from Monday to $58.63.
October futures drew more pressure on the fourth of five days as some funds trading in CME’s livestock markets shifted or “rolled” October positions into deferred months. The process is done in conjunction with the Standard & Poor’s Goldman Sachs Commodity Index (S&PGSCI).
Profit-taking and fund rolling snapped CME live cattle future’s two-day winning streak, said traders.
October live cattle ended 1.025 cents per pound lower at 104.675 cents, and December closed 0.900 cent lower at 105.825 cents.
Uncertainty regarding cash prices later this week kept futures on the defensive.
Market bulls cited highly-profitable packer margins and Tuesday morning’s beef cutout price hike as supportive cash price influences.
Contrarians look for steady to lower prices for cash cattle because of more of them being for sale this week and expectations for increased supplies as fall approaches.
Last week, market-ready, or cash cattle, brought $105 to $106 per cwt, $5 to $6 lower than a week earlier.
Tuesday morning’s choice beef price jumped 96 cents per cwt from Monday to $188.49. Select cuts were 94 cents higher at $182.16, the USDA said.
Profit-taking and steady-to-weaker cash feeder cattle prices sank CME feeder cattle futures. September ended 1.550 cents per pound lower at 133.375 cents.
