CHICAGO, Oct 5 (Reuters) – Chicago Mercantile Exchange lean hog futures fell sharply on Wednesday, with some contracts posting new lows, led by profit-taking and seasonally rising hog numbers, traders said.
Cooler fall temperatures in the Midwest and highly-nutritious new-crop corn are causing pigs to grow faster.
The U.S. Department of Agriculture data on Wednesday showed average hog weights in Iowa/Minnesota for the week ending Oct. 1 at 281.0 pounds, up 1 pound from last week and up 0.7 pound from a year ago.
From Monday to Wednesday packers processed 1.323 million hogs, 22,000 more than the same period a year earlier, according to USDA estimates.
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Farmers are encouraged to move hogs to market as quickly as possible, particularly in an environment where prices for their animals continue to trend lower, an Indiana hog merchant said.
Wednesday morning’s slaughter-ready, or cash, hog prices in the U.S. Midwest were mostly 50 cents per cwt weaker than on Tuesday, said regional hog merchants.
October closed down 0.400 cent per pound to 48.225 cents, and posted a fresh low of 47.625 cents. Most-actively traded December ended 2.050 cents lower at 41.450 cents and hit a new low of 41.100 cents.
Short-covering and CME live cattle futures’ initial discounts to preliminary cash prices landed contracts in positive territory for a second day in a row, said traders.
October ended 0.950 cent per pound higher at 102.850 cents, and December up 0.375 cent to 103.050 cents.
On Wednesday morning, a small number of slaughter-ready, or cash, cattle in Kansas brought at $102 per cwt, down from $103 to $104 there a week ago, said feedlot sources. They said remaining cattle in the U.S. Plains were priced at $106.
Investors have already priced in the $102 cash trade with expectations of packers paying more for unsold cattle based on futures’ two-day rally, a trader said.
But, others are skeptical that processors will pay up for supplies given tepid wholesale beef demand and available animals that were previously contracted against the futures market.
“I have my doubts because there is still too much of negative vibe in the market,” said JRS Consulting owner Jack Salzsieder.
CME feeder cattle finished lower on profit-taking and as much as $12 lower cash feeder cattle prices. October feeder cattle closed 0.550 cent per pound lower at 127.450 cents.
