By Theopolis Waters
CHICAGO, July 2 (Reuters) – Chicago Mercantile Exchange hog futures on Tuesday slid for a third straight session as lower wholesale pork values stirred profit taking, traders and analysts said.
The U.S. Department of Agriculture’s Tuesday evening mandatory wholesale pork price, or cutout, was $106.91 per hundredweight, $1.50 lower than Monday. The cutout was largely pressured by the price for pork bellies that tumbled more than $16.00.
“Bellies for bacon were getting pretty lofty which choked off end-user demand for product,” a trader said.
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Investors also sold hog futures in anticipation of lower trending cash prices.
Packing plants will close for at least one day over the U.S. July 4th Independence holiday, curbing their need for hogs. And processors will resist raising cash hog bids as supplies build seasonally.
The average hog price on Tuesday evening in the most-watched Iowa/Minnesota market was up 21 cents per cwt. from Monday to $99.29.
On Monday and Tuesday packers processed 846,000 hogs, 48,000 more than a week ago and up 9,000 from a year earlier, according to the U.S. Department of Agriculture.
CME July hogs settled down 0.075 cent per pound to 101.000 cents.
August closed down 0.375 cent to 96.625 cents. It drifted below the 10-day and 20-day respective moving averages of 97.79 cents and 96.97 cents, which stirred fund selling.
CATTLE SLIPS ON CASH CAUTION
CME live cattle lost ground as traders exercised caution while waiting this week’s cash cattle sales, according to analysts and traders.
“August futures priced in a steady cash cattle trade, but that remains to be seen,” a trader said.
CME live cattle August finished at 121.900 cents, down 0.275 cent per lb, and October at 125.925 cents, or 0.200 cent lower.
Cash cattle bids in Texas surfaced at $117 per cwt. with no response from sellers, feedlot sources said. Cash cattle last week in the U.S. Plains moved at $120 to $121, they said.
Less cattle for sale and packers needing animals for the first full week of production next week should underpin cash prices, traders and analysts said.
hey also cited the firm wholesale beef prices at a time when meat demand slows after the July 4th holiday.
The government on Tuesday evening quoted the wholesale price of choice beef at $197.10 per cwt., up 46 cents from Monday. Select cuts rose 84 cents to $186.62.
Funds sold August cattle and bought deferred months as they moved long positions further out prior to similar moves next week by followers of the Goldman Sachs Commodity Index.
Funds that follow the index will shift their spot-month long positions mainly into October. That shifting will be for five day starting July 8.
CME feeder cattle settled mixed. Weak live cattle futures pulled down August feeder cattle.
Spread traders also bought deferred CME feeder cattle months and sold the August contract.
August CME feeder cattle closed at 150.900 cents, 0.325 cent per lb. lower. September finished unchanged at 153.325 cents and October at 154.900 cents, up 0.050 cent.
