By Theopolis Waters
CHICAGO, June 30 (Reuters) – Chicago Mercantile Exchange hog futures closed sharply higher on Monday, with most months up the three-cent daily price limit as investors covered short positions after learning a pig virus has hit the U.S. hog herd harder than expected, traders said.
Friday’s U.S. Department of Agriculture hog report showed a bigger-than-expected decline in the U.S. hog herd as the Porcine Epidemic Diarrhea virus cut supplies.
“A fair number of people who were short going into the report where scrambling to get out of those positions,” said JBS Trading Co. President James Burns.
Read Also
U.S. grains: Corn futures edge up, soybeans sag on improving US crop ratings
Chicago Board of Trade corn futures extended slight gains on Tuesday as short covering and bargain buying continued to support a rebound from contract lows reached during the previous session.
Fund buying contributed to back-month futures’ limit-up advances.
Uncertainty about cash hog prices and July futures’ premium to CME’s hog index at 126.08 limited that contract’s advances.
While packing plant closures during the Fourth of July holiday will reduce their need for hogs, a few processors are preparing for production next week.
Record-high pork values, as supermarkets wrap up meat purchases for the upcoming holiday, provided underlying support for the July contract.
Monday morning’s wholesale pork price was up $1.91 per hundredweight (cwt) from Friday to an all-time high of $134.90, according to USDA data.
July hogs closed up 1.750 cents per lb. to 132.650. August and October ended up 3.000 cents at 132.825 and 113.900 cents, respectively.
PROFIT-TAKING PARE EARLY CATTLE GAINS
CME live cattle ended lower on profit-taking that erased initial advances to a new high stirred by last week’s record-high prices for slaughter-ready, or cash, cattle, traders said.
Last Friday, cash cattle in the U.S. Plains moved at an all-time high of $155 per cwt.
The market on Friday sent a red flag that it was about to top out, despite the positive cash news, said R.J. O’Brien floor manager Jim Brooks.
At first, CME live cattle on Monday drew more support from record-high beef prices.
USDA’s morning data showed wholesale price for choice beef climbed $1.01 per cwt to $246.99, topping Friday’s record. Select beef was at $238.54, moving beyond Thursday’s $238.19 record.
Investors await this week’s cash cattle prices as packers buy animals for the first full week of production after the holiday.
Beef demand is expected to taper off soon as grocers evaluate how much product was purchased during the three-day holiday weekend.
June live cattle, which expired today, finished up 0.750 cent per lb. at 153.000 cents. August closed down 1.050 cents to 150.075 cents, and October 1.225 cents lower at 153.125.
CME feeder cattle ended lower pressured by profit-taking and live cattle market selling.
August closed down 1.550 cents per lb. to 212.775 cents, and September at 214.000 cents, 1.900 cents lower.
