By Theopolis Waters
CHICAGO, Feb 25 (Reuters) – Chicago Mercantile Exchange lean hogs posted their sixth straight higher settlement on Wednesday as prices for market-ready or cash hogs edged upward, traders said.
April futures closed 0.750 cent per pound higher at 69.325 cents, and May up 2.850 cents at 81.900 cents.
Wednesday morning’s average cash hog price in Iowa/Minnesota rose $1.83 per hundredweight (cwt) from Tuesday to $66.72, the U.S. Department of Agriculture said.
Wintry weather in parts of the Midwest hampered hog deliveries as supplies tighten seasonally, traders said.
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Packers on Wednesday processed 18,000 fewer hogs than last week at 406,000 head, based on USDA data.
Higher cash prices and lower wholesale pork values whittled down packer margins.
USDA data showed the morning’s wholesale pork price at $69.64 per cwt., down $1.36 from Tuesday.
Despite worrisome margins and pork demand, packers may raise hog bids in the near term to maintain market share, said AgFutures Managed Investments hog futures trader Tom Cawthorne.
CATTLE SNAPS LOSING STREAK
All CME live cattle contracts finished higher for the first time in five days on short-covering and solid wholesale beef prices, traders said.
February, which will expire on Friday, ended 1.700 cents per lb higher at 158.350 cents, and April up 1.275 cents at 146.850 cents.
The morning’s Choice wholesale beef price, or cutout, climbed $2.28 per cwt, in light volume to $246.52 per cwt from Tuesday. Select cuts rose $2.83 to $245.48, based on USDA data.
Packers cut slaughter rates, which likely lifted wholesale beef prices, traders and analysts said.
Beef cutout’s new-found gains and last week’s softer cash prices improved packer margins.
Hedgersedge.com calculated beef packer margins at a negative $40 per head, compared with a negative $69.70 on Tuesday and a negative $115.80 per head a week ago.
Last week, cash cattle in the U.S. Plains moved at $158 to $160 per cwt., down as much as $4 from the previous week.
This week, cash cattle bids stood at $156 to $157 per cwt against $162 asking prices, feedlot sources said.
Weather-constricted supplies and better wholesale beef values might underpin cash prices, traders said.
But kill reductions and current futures prices could limit cash spending, they said.
CME feeder cattle drew support from short-covering and live cattle market buying.
March closed 1.375 cents per lb. higher at 196.975 cents, and April up 1.225 cents at 195.850 cents.
