CHICAGO, Aug 15 (Reuters) – Chicago Mercantile Exchange lean hog contracts closed higher for a second consecutive session on Monday, buoyed by stronger cash and wholesale pork prices, traders said.
October ended 2.500 cents per lb higher at 62.500 cents and December finished up 2.075 cents to 57.025.
Cash hog prices in the U.S. Midwest on Monday morning were mostly 50 cents to $1 per cwt higher, according to regional hog dealers.
Monday morning’s wholesale pork price surged $3.27 cents per cwt from Friday to $78.03, sparked by almost $16 per cwt higher pork belly prices, the U.S. Department of Agriculture said.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Futures’ sizable discounts to CME hog index for Aug. 11 at 67.57 cents attracted prospective bullish traders.
Given the big discount to the index, any indication that hog or pork demand is increasing at lower price levels stirred significant short-covering and fresh buying, said independent livestock futures trader Dan Norcini.
CME lean hogs gained further upward traction after October and December topped their respective 20-day moving averages of 60.76 and 56.10 cents.
Live cattle at the CME lost ground after investors periodically sold August futures and simultaneously bought deferred contracts, said traders.
Also, they said, some market participants sold live cattle contracts and at the same time purchased lean hog futures.
August live cattle ended down 0.400 cent per lb at 115.925 cents, and October closed 0.550 cent lower at 113.975 cents.
Last week packers paid $118 to $119 per cwt for market-ready, or cash, cattle that a week earlier brought $117 to $120.
The morning’s choice beef price climbed $1.01 per cwt from Friday to $202.20. Select cuts were up 66 cents to $194.28, the USDA said.
Overall meat demand is expected to improve over the next two weeks as supermarkets gear up to feature product during the Labor Day holiday, said traders and analysts.
They said packers have the wherewithal to pay more for cattle this week given their healthy profits.
Beef packer margins for Monday, on average, were a positive $27.95 per head, up from a positive $21.25 on Friday and a positive $13.25 a week ago, as calculated by HedgersEdge.com.
Profit-taking and firmer corn prices undercut CME feeder cattle futures. August feeders closed 0.425 cent per lb lower at 148.650 cents.
