CHICAGO, Aug 17 (Reuters) – Chicago Mercantile Exchange lean hog contracts finished higher on Wednesday, ignited by short-covering after Tuesday’s selloff and the morning’s wholesale pork price rebound, said traders.
October ended 1.150 cents per pound higher at 61.000 cents, and December finished up 1.300 cents to 56.750.
After falling almost $3 per cwt the day before, Wednesday’s wholesale pork price jumped $1.31 cents per cwt to $75.27 led by more than $6 higher pork belly prices, the U.S. Department of Agriculture said.
Grocers and processors bought pork bellies at lower prices due to ample hog numbers and abundant product in U.S. cold storage warehouses, said traders and analysts.
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Investors and hog merchants are closely monitoring mostly steady U.S. Midwest cash hog prices as packing plants plan to close during the Labor Day holiday on Sept. 5..
Fund buying gave October and December contracts added lift after both contracts broke through their respective 20-day moving average of 60.43 and 55.90 cents.
October encountered technical resistance around 61.00 cents, and the contract could gain significantly if it goes through that level, said independent livestock futures trader Bill Cipolla.
Technical selling and uneasiness ahead of cash prices by Friday pressured CME live cattle futures, said traders.
August live cattle ended down 0.750 cent per pound to 114.750 cents, and October closed 1.000 cent lower at 112.400 cents.
Both contracts settled below their respective 20-day moving averages of 114.84 and 113.09 cents.
Market-ready, or cash, cattle bids in Texas held at $118 per cwt versus $120 to $122 asking prices there and elsewhere in the U.S. Plains, said feedlot sources. Last week packers paid mostly $118 to $119.
Future’s recent retreat and more cattle for sale than last week might discourage processors from further raising cash bids, a trader said.
Still, profitable packer margins and increased beef sales for Labor Day barbecues could ease potential cash price pressure, he said.
The morning’s choice beef price was up 14 cents per cwt from Tuesday to $201.98. Select cuts were 60 cents higher at $193.27, the USDA said.
Market participants await the government’s monthly Cattle-On-Feed report on Friday.
Modest fund liquidation and live cattle futures losses pulled down CME feeder cattle futures. August feeders closed 0.400 cent per pound lower at 146.725 cents.
