By Theopolis Waters
CHICAGO, April 23 (Reuters) – Chicago Mercantile Exchange hog futures jumped two percent on Wednesday, with some months up the three-cent limit, driven by fund buying after contracts punched through moving average levels, traders said.
May hogs closed up 2.950 cents per pound at 123.975.
June and July ended up their three-cents limit at 126.250 cents and 124.000, respectively. Both months landed above their 20-day moving averages of 123.951 cents and 121.037, respectively.
Futures received more lift from short-covering after wholesale pork values and prices for market-ready, or cash hogs, moved higher.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
Wednesday afternoon’s average hog price in the closely watched Iowa/Minnesota market rose 48 cents per hundredweight to $116.20, according to the U.S. Department of Agriculture.
Separate government data showed the afternoon’s wholesale pork price gained 32 cents per cwt. from Tuesday to $117.41.
Some packers need hogs for Saturday to make up for downtime during Monday’s extended Easter holiday observances. And, grocers are preparing to feature pork for spring grilling demand.
Speculators bought deep deferred months in the belief that higher Chicago Board of Trade corn prices might discourage producers from feeding hogs to heavier weight, which is supportive to cash prices.
Still, some investors are nervous about futures’ bearish premium to CME’s hog index, which is at 118.48 cents.
CATTLE UP WITH BEEF
Steadily rising beef cutout values and futures’ discount to last week’s slaughter-ready, or cash, cattle prices lifted CME live cattle futures, traders said.
Wednesday afternoon’s wholesale choice beef price, or cutout, was up $1.43 per cwt. from Tuesday at $232.64. Select cuts rose $1.05 to $220.67, based on USDA data.
Reduced slaughter rates during the Easter holiday resulted in less beef for retail buyers. Packers also curtailed production to offset tight cattle supplies.
From Monday to Wednesday, packers processed 334,000 head of cattle, down 14,000 from last week and 34,000 fewer than a year ago.
Investors await this week’s cash cattle sales and the government’s monthly Cattle-On-Feed report on Friday.
Analysts expect the number of cattle placed in feedyards in March likely increased 0.8 percent from a year ago due to record-high prices for market-ready cattle.
Strong beef demand and improved packer margins bode well for cash cattle prices, but more cattle for sale might limit potential cash advances.
HedgersEdge.com calculated the beef packer margins for Wednesday at an estimated negative $26.25 per head, compared with a negative $45.15 on Tuesday and a negative $116.75 a week ago.
Last week, cash cattle in Texas and Kansas fetched $147 per cwt., and at $148 in Nebraska, feedlot sources said.
April live cattle closed up 0.225 cent per pound to 143.925 cents, and June ended at 135.100 cents, up 0.125 cent.
CME feeder cattle drew support from firm live cattle futures and steady to $2 higher prices for cash feeder cattle in local markets.
May closed 0.275 cent per lb higher at 178.625 cents, and August ended up 0.175 cent to 182.450 cents.
