By Theopolis Waters
CHICAGO, March 25 (Reuters) – Chicago Mercantile Exchange hog futures settled down their 3-cent daily price limit on Tuesday, rattled by profit-taking and a drop in wholesale pork prices, traders and analysts said.
Sentiment that cash hog prices may be about to peak if packers are unable to move pork contributed to the CME hogs’ selloff, traders said. Market declines triggered fund liquidation and sell stops, they said.
Tuesday morning’s wholesale pork price tumbled $2.66 per hundredweight from Monday to $128.98, according to U.S. Department of Agriculture data.
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The government’s morning direct hog price data was not available. Hogs in the Midwest early on Tuesday traded down 50 cents per cwt. to up $2, hog dealers said.
Futures felt more pressure as nervous investors pocketed profits in advance of the government’s quarterly hog report on Friday, traders said.
April finished down 3.000 cents per pound at 121.650 cents, below the 10-day moving average of 122.000 cents. June finished 3.000 cents lower at 125.200 cents.
CATTLE UP AFTER CHOPPY SESSION
CME live cattle futures ended firm after a volatile day of trading, supported by their discounts to initial steady cash prices, traders said.
Slaughter-ready or cash cattle in Texas and Kansas traded lightly at $150 per cwt., which was at par with last week’s sales, feedlot sources said. Feedyards elsewhere in the U.S. Plains were holding out for more money, they said.
Packers bought cattle earlier in the week than usual, which suggests that they may need supplies, a trader said.
Lower wholesale beef values and processors pulling from cattle contracted against April futures may keep a lid on prices for unsold animals, he said.
The morning’s wholesale choice beef price slipped 39 cents per cwt. from Monday to $240.73 in light sales volume. Select cuts fell $1.10 to $234.83, based on USDA data.
Futures snapped back from morning losses that were led partly by fallout from the neighbouring hog market.
“Beef may have to come down to compete with cheaper pork, which tends to eat into packer margins,” a trader said.
HedgersEdge.com calculated the beef packer margins for Tuesday at an estimated positive $5.65 per head, compared with a negative 35 cents on Monday and a positive $23.45 a week ago.
April live cattle closed up 0.225 cent per lb. to 144.375 cents, and June ended unchanged at 136.425 cents. August finished at 133.900 cents, up 0.175 cent.
Firm CME live cattle and higher prices for feeder cattle in local markets pushed feeder cattle futures to a record high.
March ended up 0.525 cent per lb. at 177.225 cents, and hit a new contract high of 177.600 cents in electronic trading. April closed 1.050 cents higher at 177.350 cents.
