CHICAGO, Aug 10 (Reuters) – Chicago Mercantile Exchange lean hog futures gained as much as 2 percent on Wednesday, reversing from earlier losses on strength from technical buying and a rebound in wholesale pork prices, traders said.
Hog futures tested life-of-contract lows reached last week but did surpass those lows, sparking short-covering. The opposite was true in cattle, with live and feeder cattle futures failing to top recent multi-week highs before each finished the session narrowly lower.
Hog prices still faced pressure from record-large U.S. supplies of hogs and pork as well as lackluster retailer demand.
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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.
However, investors were taking profits on earlier bearish positions on ideas hogs may have reached at least a short-term bottom, Allendale Inc analyst Rich Nelson said..
“Everyone – bulls and bears – are waiting for a rebound of some sort. Maybe we’ll get one even without a story,” Nelson said, noting a round of buying after hogs came within a few cents of their Aug. 4 lows.
Lean hog futures were further supported by midday U.S. Department of Agriculture data showing wholesale pork prices rising from the lowest levels since April.
Most-active CME October hogs settled up 0.775 cent at 58.975 cents per lb, a gain of 1.5 percent and the biggest jump in 1-1/2 weeks. December hog futures rose 2 percent while front-month August hogs touched a lifetime low before rallying, ahead of that contract’s expiration on Friday.
Live cattle for October delivery finished 0.075 cent lower at 114.925 cents per lb, capping an “inside day” on the charts in which prices did not surpass the previous session’s high or low.
CME September feeder cattle were 0.350 cent lower at 148.500 cents per lb, easing after reaching a three-month high on Tuesday.
Cash bids for slaughter-weight cattle moving out of feedlots were beginning to circulate, and futures to some extent were waiting for cues of how cash trade would develop after Plains cattle last week traded up $2 at mostly $118 per cwt.
Feedlots were offering fewer cattle for sale this week, and bullish traders were hopeful gains in cash markets could propel futures higher.
“Any steady cash trade … would be disappointing,” one cattle broker said.
