By Theopolis Waters
CHICAGO, March 11 (Reuters) – Chicago Mercantile Exchange lean hog futures fell three percent Wednesday, with deferred contracts making new lows, on the strong dollar and bird flu in Arkansas, traders said.
The U.S. Department of Agriculture on Wednesday confirmed the case of highly pathogenic avian influenza in a commercial turkey flock in Arkansas.
Investors worried that the Arkansas bird flu outbreak could hurt U.S. poultry exports, causing product to back up and compete with already low-cost pork.
“The last thing that the hog market needs right now is something along this line,” said independent livestock futures trader Dan Norcini, referring to the outbreak.
The strong dollar makes U.S. goods less attractive to foreign buyers.
USDA data showed the afternoon wholesale pork price was down 42 cents per hundredweight (cwt) to $68.21 from Tuesday.
Wednesday afternoon’s average cash hog price in Iowa-Minnesota fell $1.39 per cwt from Tuesday to $62.12, USDA said.
Funds involved in CME’s livestock markets sold or “rolled” some of their April positions and simultaneously bought deferred contracts. The trading strategy known as the “roll” is tied to the Standard & Poor’s Goldman Sachs Commodity Index (S&P GSCI).
Wednesday was the fourth of five days for the S&P GSCI roll procedure.
April closed 1.850 cents per lb lower at 64.125 cents. May ended 2.475 cent lower at 73.325 cents, and posted a fresh contract low of 72.800 cents in after-hours electronic trading.
CATTLE MOVE UP
CME live cattle futures climbed in anticipation of steady or higher cash prices this week, traders said.
April closed 0.850 cent per lb higher at 155.600 cents, and June up 0.675 cent to 146.925 cents.
Packers may compete for fewer cattle for sale, despite their slipping margins and lackluster wholesale beef demand.
Cash cattle bids in Kansas and Texas were at $161 per cwt against up to $164 asking prices, said industry sources. Last week, cash cattle moved at mostly $161 to $162.
The afternoon’s choice wholesale beef price dipped 32 cents per cwt from Tuesday to $247.47. Select cuts slipped 24 cents to $244.88, the USDA said.
CME feeder cattle followed live cattle futures higher.
March closed 2.375 cents per lb higher at 214.600 cents.