CHICAGO, Aug 18 (Reuters) – Chicago Mercantile Exchange lean hog futures lost modest ground on Tuesday, weakened by profit-taking while investors awaited direction from the afternoon’s cash prices, traders said.
The spot-October contract closed 0.150 cent per lb lower at 66.125 cents, and December down 0.050 cent at 62.250.
Prices for market-ready, or cash, hogs in the Midwest Tuesday morning were mostly in line with Monday, as packers booked animals for the rest of this week guided by their wider margins, regional hog dealers said.
Pork processor margins for Tuesday were at $21.10 per head, compared with $20.50 on Monday, as calculated by HedgersEdge.com.
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However, other processors are not actively competing for supplies after buying all they need for early next week, a dealer said.
Strong wholesale pork values limited futures losses with supermarkets rounding out purchases for Labor Day grilling demand, traders and analysts said.
The morning’s wholesale pork price at $91.04 per cwt jumped $1.47 from Monday, sparked by $6.24 higher picnic shoulder cuts used in pulled pork recipes, according to U.S. Department of Agriculture data.
Futures’ price discount to CME’s hog index for Aug. 14 at 78.70 cents provided underlying market support.
CATTLE FUTURES SAG
Market participants sold CME August live cattle futures and at the same time bought deferred contracts stirred by uneasiness heading into cash cattle sales later this week, traders said.
Spot-August futures closed 0.700 cent per lb lower at 147.200 cents, and October down 0.300 cent at 147.400 cents.
Some investors believe profitable margins will encourage processors to maintain prices in line with last week.
A week ago, cash cattle in the U.S. Plains traded lightly at $148 to $151 per cwt, feedlot sources said.
However, other traders suspect that packers will curb cash spending based on soft beef demand and 21,000 more cattle for sale than last week.
Tuesday morning’s wholesale beef price for choice cuts was at $245.46 per cwt, down 6 cents from Monday. Select slipped 17 cents to $236.22, the USDA said.
It is surprising futures are not higher given their discounts to last week’s cash prices, said KIS Futures Inc Vice President Lane Broadbent.
“They’re (traders) just thinking this cash market is not going to be great,” he said.
CME feeder cattle closed moderately higher on back-month live cattle market advances. August finished up 0.150 cent per lb at 214.550 cents.
