By Michael Hirtzer
CHICAGO, Feb 23 (Reuters) – U.S. lean hog futures fell more than one percent on Thursday, extending losses to their third straight session, on pressure from expectations for declines in Midwest cash hog markets, traders and analysts said.
Lower wholesale pork prices this week, especially pork belly cuts, also weighed on futures and squeezed packer profit margins.
“The (hog) futures market has been trying to say the cash market is potentially coming down, and we’re seeing that,” said Top Third Ag Marketing broker Craig VanDyke.
CME April hogs settled 1.175 cents lower at 66.575 cents per pound, the lowest since Dec. 30.
The nearly six percent decline in the past three sessions represented the biggest drop for the contract since September.
Futures already were trading at a discount to Midwest cash hog markets.
The declines on Thursday deepened futures’ discount and suggested that traders were preparing for more losses.
Hogs in Iowa and Minnesota fell $2.20 to $70.74 per hundredweight, according to the U.S. Department of Agriculture.
Monthly U.S. cold storage data released by USDA after the close of trading showed 526.7 million pounds of pork in storage, below average analyst estimates of 538.2 lb.
There were 14.014 million lb. of pork bellies in storage, a record low for the month.
LIVE CATTLE GAIN, BEEF STOCKS SMALLER THAN EXPECTED
Beef in cold storage totaled 537.54 million lb., a record high for the month but smaller than analyst estimates for 597.8 million lb.
“Call it bullish beef … (and) slightly bullish pork as well,” one broker said of the cold storage data.
CME live cattle futures were mostly higher and feeder cattle narrowly higher to slightly lower in relatively light-volume dealings.
Cattle prices have been buoyed this week by higher steer prices in Texas and Nebraska, but investors also were evening positions ahead of USDA’s monthly Cattle on Feed report due on Friday.
Analysts polled by Reuters expected an 11 percent spike in cattle placed on feed during January, supplies that would be available to beef packers in the coming months.
“The market has been pretty quiet,” VanDyke said.
“(Cattle) cash strength is not necessarily encouraging aggressive selling but, unfortunately, it’s not encouraging aggressive buying either.” CME April live cattle finished up 0.450 cent to 116.525 cents per pound and CME March feeder cattle were up 0.050 cent to 125.150.
