By Sam Nelson
CHICAGO, July 8 (Reuters) – U.S. lean hog futures fell on Monday on disappointing export sales of U.S. pork and on expectations for lower cash hog markets soon, traders and analysts said.
“Pork exports were down four percent in May, exports are really sluggish and I think everyone was banking on strong exports,” said Dennis Smith, a broker for Archer Financial.
The U.S. Department of Agriculture in a report issued on Friday said U.S. May pork exports were down four percent from the same month a year ago.
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Chicago Mercantile Exchange lean hog futures for July delivery closed down 1.225 cents per pound at 101.125 cents per lb. and August was down 2.200 cents at 95.550.
Analysts said cash hog markets likely would be falling soon but U.S. Midwest cash hogs traded steady to $1 per hundredweight higher on Monday due to a tight supply of hogs, cash dealers said.
“Cash hogs supposedly will be turning weak so everybody is talking about the cash and cutout values rolling over,” said Jim Clarkson, an analyst for A&A Trading Inc.
Estimated profit margins for U.S. pork packing companies stood at a positive $2.65 per head on Monday, up from $2.10 on Friday but below the positive $13.90 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
Cattle futures closed mixed in rather directionless trading with no significant shift in cattle fundamentals leaving the market adrift.
“Trade in cattle futures was very quiet and in a small range, a pretty quiet day and not a lot of direction right now,” Clarkson said.
CME cattle for August delivery closed up 0.125 cent per lb. at 122.075 cents, but October cattle futures were down 0.075 cent at 126.175 cents.
USDA on Monday reported choice quality wholesale beef carcasses trading down 83 cents per cwt at $195.51.
“Beef cutout was soft and I see it going down more. Cash cattle also were lower last week and they’ll probably be even lower this week,” said Dennis Smith, a broker for Archer Financial.
Estimated profit margins for U.S. beef packing companies stood at a positive $63.60 per head on Monday, down from $73.60 on Friday and below the positive $70.55 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
Feeder cattle futures closed lower as Chicago Board of Trade corn futures rose, leading to reduced demand because of the potential for higher costs to feed young feeder cattle to market weight.
CME August feeder cattle were down 0.200 cent per lb. at 151.600 cents and September feeder cattle were down 0.025 cent at 154.150 cents.
