By Theopolis Waters
CHICAGO, March 11 (Reuters) – Chicago Mercantile Exchange hog futures on Tuesday reached a new high for a second straight session as buying pegged to a deadly pig virus offset profit-taking, traders said.
The Porcine Epidemic Diarrhea virus sweeping across U.S. hog farms and also in Canada is already hurting production in parts of the American Midwest. The virus is expected to further reduce hog numbers this year.
Processors and retailers competed for pork in anticipation of a supply shortage later, which drove up prices for slaughter-ready hogs and pork at wholesale, a trader said.
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Tuesday afternoon’s cash hog price in the closely-watched Iowa-Minnesota market was $2.22 higher than Monday at $110.45 US per hundredweight, the 16th straight day of gains, according to the U.S. Department of Agriculture.
USDA data showed the afternoon’s price of wholesale pork at $117.53 per cwt., shattering Monday’s $114.94 record.
April closed 1.100 cents per pound higher at 117.100 cents, and hit a new contract high of 118.575 cents in electronic trading. June finished 1.450 cents per lb. higher at 124.950 and peaked at a fresh contract high of 126.125 cents.
MOST LIVE CATTLE SLIP
CME live cattle futures ended mostly weak after traders simultaneously sold back-months and bought April futures stirred by higher wholesale beef costs, traders said.
Packers trimmed slaughter rates to counter tight supplies, while realigning their margins and boosting wholesale beef prices, a trader said.
The afternoon’s wholesale choice beef price, or cutout, rose $2.47 per cwt. from Monday to $241.47. Select cuts climbed $1.72 to $237.71, based on USDA data.
Beef packer margins for Tuesday were estimated at a negative 90 cents per head, compared with a negative $18.15 per head on Monday and a negative $61.30 a week ago, as calculated by HedgersEdge.com.
Cash cattle price uncertainty limited April future’s advances.
Bullish traders expect cattle to trade steady to firm with last week given their improved packer margins and strong wholesale beef cutout value.
Market bears see processors reining in cash spending by curbing production.
Last week, cash cattle moved at $148 per cwt. in Texas and Kansas and at $150 in Nebraska, feedlot sources said.
April live cattle closed up 0.075 cent per lb. at 143.225 cents. June finished at 136.100 cents, down 0.300 cent, and August ended 0.425 cent lower at 134.025 cents.
After posting a new high, CME feeder cattle mimicked live cattle futures’ mostly weak settlement.
March ended up 0.225 cent per lb. at 173.925 cents, and notched a new contract high of 174.425 cents.
April closed down 0.150 cent at 175.575 cents, after hitting a fresh contract high of 176.600 cents. May closed down 0.300 cent to 176.250 cents, after posting a fresh contract high of 177.350 cents.
