By Theopolis Waters
CHICAGO, Feb 28 (Reuters) – The lead Chicago Mercantile Exchange hogs contract hit a 2-1/2-year high on Friday, supported by this week’s solid cash price performance, traders said.
Higher-trending wholesale pork prices, short-covering and fund buying helped push CME April hogs to their 3.000-cents daily price limit.
Funds are ‘rolling’ out of equities, which appear to have topped out, and into commodities such as hogs and cattle led by fundamental bullish indicators, said U.S. Commodities analyst Don Roose.
Friday morning’s average price of hogs in the closely watched Iowa/Minnesota market was $100.36 per hundredweight (cwt), up $1.65 from Thursday, according to the U.S. Department of Agriculture.
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Separate USDA data showed the morning’s price of pork at wholesale at $104.67 per cwt, $1.77 higher than on Thursday.
Anticipation of tighter supplies due to the deadly Porcine Epidemic Diarrhea virus (PEDv) generated speculative buying that later lifted August to its 3.000-cent price limit.
The spread of PEDv, which is fatal to piglets, on U.S. and Canadian farms is expected to reduce the number of hogs available for slaughter beginning this summer.
April hogs settled at 106.850 cents per lb. That was up its 3.000-cents limit and a new contract high in electronic trading.
June finished at 112.225 cents, 2.300 cents higher, after hitting a new contract high of 112.925 cents.
LIVE CATTLE STEADY TO FIRM
Lead-contract CME live cattle futures marked a new high before finishing steady to firm after a volatile day of trading.
Futures ultimately drew support from much-improved wholesale beef values and this week’s record-high cash prices, traders said.
They said futures’ discount to cash cattle returns helped the market fend off periodic selling linked to end-of-month profit taking.
This week, cash cattle in Texas and Kansas sold at $150 per cwt, surpassing the January record of $146 to $147. Cash cattle in Nebraska moved at $152, topping last month’s $150 record.
Friday morning’s wholesale choice beef price, or cutout, surged $3.15 per cwt from Thursday to $224.56. Select cuts jumped $2.66 to $221.66, based on USDA data.
Packers were short-bought cattle at a time when colder weather slowed down animal weight gains, traders said.
“Because packers were losing money on cattle bought this week, they need to push the cutout higher,” said Roose.
February live cattle, which expired at noon CST (1800 GMT), settled 1.900 cents per lb higher at 151.950 cents. It peaked at a fresh contract high of 153.000 cents.
April, the new lead month, ended 0.525 cent higher at 144.975 cents. June closed unchanged at 134.200 cents after spiking to a new contract high of 135.150 cents.
Profit taking and the upswing in corn prices pressured CME feeder cattle.
March ended down 0.125 cent per lb at 171.700 cents.
