By Theopolis Waters
CHICAGO, Nov 10 (Reuters) – Chicago Mercantile Exchange lean hogs contracts gained for a third straight session, partly on speculation that early wintry weather seeping into the Midwest could disrupt hog production and deliveries, traders said.
Heavy snowfall tends to snarl transportation of livestock while prolonged periods of extreme cold tend to slow animal weight gains.
Packers may have to raise bids for hogs to convince producers to open doors to their swine buildings, said independent livestock futures trader Dan Norcini.
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U.S. livestock: Cattle futures climb higher to end week
Cattle futures on the Chicago Mercantile Exchange were stronger on Friday, finding some support from fresh details on the U.S. Department of Agriculture’s plans to deal with new world screwworm.
CME hogs garnered more support from sentiment that the two-week decay in market-ready or cash hog prices may be about to end soon.
The U.S. Department of Agriculture’s Monday morning direct cash hog prices were unavailable. Hogs in the Midwest traded mostly steady, according to regional hog dealers.
Consumers may turn to relatively low-cost pork to replace expensive beef, which could support cutout values.
USDA data showed the morning’s wholesale pork price, or cutout, slipped 36 cents per hundredweight (cwt.) from Friday at $94.38.
Some packing plants will be closed on Tuesday in observance of the U.S. Veterans Day holiday, which could take roughly 30,000 hogs out of that day’s kill, industry analysts said.
December ended 0.775 cent per pound higher at 89.550 cents, and February 0.675 cent higher at 89.100 cents.
LIVE CATTLE RISE
CME live cattle futures drew support from buy stops and the wholesale beef price rebound, traders said.
December closed up 0.325 cent per lb. at 167.125 cents, and February 0.150 cent higher at 168.525 cents.
Monday morning’s choice wholesale beef price rose $1.26 per cwt. from Friday to $250.37. Select jumped $1.82 to $239.89, the USDA said.
Packers cut kills to improve their margins, boost wholesale cutout values and limit spending for slaughter-ready cattle.
On Monday, packers processed 108,000 cattle, down 5,000 from last week, based on USDA data.
A week ago, cash cattle in the U.S. Plains fetched mostly $167 per cwt., $1 lower than the previous week.
Beef packer margins for Monday were a negative $115.30 per head, compared with a negative $109.70 on Friday and a negative $111.85 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
This week, more cattle may be available after packers bought sparingly in recent weeks, which may again weigh on cash prices.
Aside from potential problems trucking cattle, many of the animals, and ranchers, have already prepared for the anticipated change in weather, industry experts said.
CME feeder cattle drew support from modest live cattle futures buying and steady to $2 per cwt. higher prices for feeder cattle at local markets.
November closed 0.500 cent per lb. higher at 239.025 cents, and January at 232.750 cents, up 0.300 cent.
