By Meredith Davis
CHICAGO, April 7 (Reuters) – Fund buying boosted Chicago Mercantile Exchange hogs more than one percent on Monday while wholesale pork prices also underpinned prices, traders said.
Hog futures rose late in the session as traders actively bought summer hog contracts. The CME April hog contract rose 1.52 percent due to its discount to the lean hog index and solid wholesale pork values, traders said.
April hogs closed up 1.875 cents per pound to 125.025, near its high of 125.500 cents per lb. June hogs finished 0.250 cents higher at 120.750 cents.
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The morning’s wholesale pork price increased $1.19 per hundredweight from Friday to $132.18, led by the $9.06 per cwt surge. in costs for pork bellies, USDA data showed.
“You’re getting finished product off the shelves and that is a good sign, especially when the prices are this high,” said Dominic Varricchio, commodities broker at Schwieterman, Inc.
Midwest cash hog dealers noted softer packer demand early on Monday as many pork packing plants have bought enough hogs through mid-week.
Adjusted slaughter schedules at several packing plants have offset the tight supply of market-ready hogs pegged to the spread of the deadly Porcine Epidemic Diarrhea virus (PEDv) on U.S. farms.
CATTLE FUTURES NARROWLY MIXED
CME live cattle were narrowly mixed with nearby April ending lower but deferred month contracts firmer as back month contract buyers simultaneously sold front-month April contracts, traders said.
“People that do not want to be long with delivery threatening have to go into June or August,” Varricchio said.
April futures were also pressured by uncertainty regarding cash cattle prices for this week as wholesale prices were nearly stagnant and beef packer margins slumped deeply into the red.
USDA data showed choice wholesale beef prices were up just 3 cents to $228.77 per cwt.
Beef packers’ margins were at a negative $120.20 per head, down from a negative $88 per head on Friday, and negative $58.30 per head a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
Cash cattle trade was fairly light last week as some packers used contracted cattle instead of paying in the cash market, Varricchio said.
However, packers may be less willing to pay higher prices for cattle as their profit margins drop.
Last week Kansas and Texas cash cattle sold at $148 per cwt., while Nebraska cash cattle traded at $150 per cwt, according to USDA data.
April live cattle closed down 0.025 cent per lb. to 143.025 cents. June ended up 0.125 cent to 134.925 cents and August finished 0.400 cent higher at 132.675 cents.
Fund selling dragged on feeder cattle futures while soft Chicago Board of Trade corn prices lent some support.
April closed 0.200 cent per lb lower at 177.500 cents, and May ended 0.325 cent higher at 178.850 cents.
