By Theopolis Waters
CHICAGO, April 30 (Reuters) – Chicago Mercantile Exchange hog futures on Wednesday closed down more than two percent, pressured by the recent decline in cash and wholesale pork prices, traders said.
Although the morning’s wholesale pork prices inched upward, mixed cash hog returns left traders uneasy about those prices in the near term.
“Packers are reluctant to raise bids for hogs, especially when they’ve got sufficient supplies at heavy weights to help balance production hurt by the pig virus,” a trader said.
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Government data on Wednesday showed hog weights in Iowa/Minnesota for the week ended last Saturday at a record-high 287.5 pounds, extending their streak of weekly weight records to six.
Processors cut slaughters to offset the lack of available hogs as the deadly Porcine Epidemic virus (PEDv) spreads on U.S. hog farms.
On Wednesday, the National Pork Producers Council said U.S. hog prices could climb by as much as 25 percent as a result of PEDv that killed some seven million piglets in the United States.
Current bearish fundamentals and the board’s premium to CME’s hog index, at 116.22 cents, had more impact on futures than NPPC’s forecasts that had been in the market for some time, said independent livestock futures trader Dan Norcini.
Fund selling erupted from the outset after the June and July contracts fell below technical support levels, which also triggered sell stops.
May hogs closed 2.600 cents per lb. lower at 117.675.
June ended down 2.150 cents at 123.125 cents. It earlier fell through the 40- and 10-day moving averages of 124.976 cents and 124.310 cents, respectively, before finishing almost at par with the 20-day moving average of 123.093 cents.
LIVE CATTLE RISE ON DISCOUNTS
CME live cattle futures posted modest gains, supported by their discounts to last week’s cash prices, traders said.
After the April contract expired at noon CDT, it exposed June’s discount to April futures and what packers paid for cattle last week, a trader said.
A week ago, cash cattle in Texas and Kansas traded at $145 to $146 per hundredweight, with $146 to $148 sales in Nebraska, feedlot sources said.
CME live cattle fluctuated within a narrow trading range as investors evened up positions on the last trading day of April while waiting for this week’s cash sales.
Negative packer margins and a seasonal increase in supplies are bearish influence on the cash price, traders said.
They said mixed, rather than lower, wholesale beef values and talk that a few packers might be short cattle might underpin cash returns.
April live cattle settled up 0.325 cent per lb. to 145.825 cents. June, the new lead month, ended at 137.200 cents, up 0.175 cent.
CME feeder cattle drew support from the exchange’s rising feeder cattle index, at 179.62 cents, and weak corn prices.
May closed 0.625 cent per lb higher at 181.200 cents. August ended up 0.925 cent to 187.475 cents, and set a new contract high of 187.900 in electronic trading.