By Theopolis Waters
CHICAGO, April 21 (Reuters) – Chicago Mercantile Exchange hog futures tumbled two percent on Monday, pressured by lower prices for market-ready or cash hogs, traders said.
The morning’s average of hogs in the eastern Midwest dropped $1.02 per hundredweight (cwt) from Friday to $110.56, according to the U.S. Department of Agriculture.
Hog prices in the Midwest early on Monday fell as much as $2 per cwt.
“Packers cut kills on Easter Monday and Good Friday, creating enough hogs to go around,” a Midwest hog dealer said.
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Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
USDA data showed packers on Monday processed 273,000 hogs, 104,000 fewer than last week and 136,000 less than a year ago.
Processors had already curbed production to offset the supply shortage created by the fatal Porcine Epidemic Diarrhea virus on U.S. farms.
Investors contend cash and wholesale pork values could recover soon as grocers feature product for backyard cookouts.
Monday morning’s wholesale pork price gained 55 cents per cwt from Friday to $121.89, USDA said.
Fund selling developed after nearby CME hog contracts drifted below key moving average support levels. Futures’ premiums to CME’s hog index at 120.86 cents motivated sellers.
Investors sold deferred hog contracts with the view that lower corn prices might cause producers to feed more hogs and nourish them to heavier weight.
USDA’s cold storage report, which will include last month’s total pork and beef inventories, will be issued on Tuesday at 2 p.m. CDT (1900 GMT).
May hogs finished 2.700 cents per lb lower at 120.800 cents, after falling below the 20-day and 10-day moving averages of 121.902 cents and 121.138 cents.
Most actively traded June hogs ended at 122.350 cents, 2.475 cents lower. It slipped beneath the 40-day moving average of 122.576 cents.
MOST LIVE CATTLE TURN UP
CME live cattle brushed off some early-day losses, closing mostly firm, as traders bought deferred trading months and simultaneously sold April futures.
Back-month live cattle also garnered support from their discounts to last week’s cash cattle sales.
“Guys got out of April before it goes off the board next week and not knowing what cash is going to do this week,” a trader said.
Last week, slaughter-ready or cash cattle in Texas and Kansas moved at $147 per cwt, down $1 from the week before, feedlot sources said. Cash cattle in Nebraska moved at $148, $2 lower than the prior week, they said.
A seasonal supply increase and poor, but improving, packer margins might weigh on cash cattle returns.
The beef cutout’s recent rise, and the prospect of warmer temperatures heating up grilling demand, are supportive cash influences.
Monday morning’s wholesale choice beef price, or cutout, climbed $1.69 per cwt from Friday to $228.04. Select cuts rose $1.87 to $217.10, based on USDA data.
April live cattle closed down 0.750 cent per lb to 143.450 cents.
June ended up 0.175 cent to 134.550 cents, and August closed at 134.550 cents, up 0.100 cent.
CME feeder cattle closed higher in response to back-month live cattle futures’ late-session upswing and lower corn prices.
May feeder cattle finished up 0.050 cent per lb to 178.100 cents, and August was 0.500 cent higher at 181.900 cents.
