CHICAGO, Dec 20 (Reuters) – Chicago Mercantile Exchange lean hogs on Tuesday settled lower for the first time in five sessions, hit by profit-taking and weaker cash prices before packing plants close over the Christmas holiday, traders said.
February hogs ended 2.100 cents per pound lower at 64.000 cents, and April 1.200 cents lower at 67.475 cents.
Tuesday morning’s cash hog prices in Iowa/Minnesota averaged $53.50 per cwt in light volume, $1.42 lower than on Monday, the U.S. Department of Agriculture said.
Many traders observed the session’s activity from the sidelines while awaiting USDA’s quarterly hog report on Friday at 11:00 a.m. CST (1700 GMT).
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“You’ve kind of reached a position where futures are overbought and those who were long are banking profits. And the big thing you have coming up is the hog report,” said U.S. Commodities president Don Roose.
Most CME live cattle contracts ended lower after investors claimed profits before this week’s cash prices and Friday’s USDA monthly Cattle-On-Feed report – also at 11:00 a.m. CST (1700 GMT), said traders.
On average analysts expect the report will show fewer cattle entered feedlots in November than a year ago.
The recent run up in wholesale beef prices ignited bull spreads, which consisted of investors that bought December futures and simultaneously sold deferred months.
December live cattle closed up 0.150 cent per pound to 112.100 cents. Most actively-traded February ended down 0.425 cent to 115.500 cents and April down 0.300 to 113.825 cents.
Bullish traders foresee steady-to-better cash prices given solid wholesale beef demand and highly-profitable packer margins.
Market bears believe more animals for sale and ample packer inventories heading into back-to-back holiday-shorted work weeks will pressure cash prices.
Wednesday’s sale of roughly 5,300 cattle at the Fed Cattle Exchange could provide the first indication of this week’s cash price direction. Last week, cattle there and elsewhere in the U.S. Plains traded at $112 per cwt.
Tuesday morning’s choice wholesale beef price was $1.50 per cwt higher than on Monday at $196.89. Select cuts were up 99 cents to $184.04, the USDA said.
Average beef packer margins for Tuesday were a positive $98.60 per head, up from a positive $38.05 a week earlier, as calculated by HedgersEdge.com.
Profit-taking, technical selling and weaker back-month live cattle futures undercut CME feeder cattle. January feeders closed 0.875 cent per pound lower at 130.000 cents.
