By Meredith Davis
CHICAGO, Nov 5 (Reuters) – Chicago Mercantile Exchange hog futures ended mixed in quiet trade on Tuesday, as lower cash hog prices and weaker pork wholesale values weighed on December futures, traders said.
February was supported by funds, which bought the deferred month contracts and sold, or “rolled” spot December futures, traders said.
Funds that follow the Standard & Poor’s Goldman Sachs Commodity Index will shift their December long positions in hog and cattle futures mainly into February. That shift will be for five days starting on Thursday.
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December hog futures ended down 0.075 cent at 88.250 cents per pound. February hogs ended up 0.250 cent at 91.825 cents.
Cash hog prices fell as packers coped with increasing seasonal supplies. So far this week pork processors slaughtered 870,000 head, up 10,000 from the previous week, according to U.S. Department of Agriculture data.
Weak wholesale pork prices, pressured by discounted ham values, also dragged down cash hog prices, traders said.
Tuesday morning’s wholesale pork price was at $93.63 per hundredweight down $1.29 from Monday. The price for hams dropped $4.04, according to USDA data.
“Some think the hams are overpriced right now. And we have a lot of ham in storage,” said Dan Norcini, independent livestock futures trader.
Cheaper prices for hogs helped improve pork packer margins. Pork packer margins remain firmly in positive territory at $16.50 per head, up from $12.15 on Monday and $11.60 a week ago.
Deferred months found support from sentiment that the spread of Porcine Epidemic Diarrhea virus (PEDv), a fatal disease for baby pigs, will reduce hog supplies next year.
“As the weather gets colder it is getting more conducive to the spread of the virus, but no one can really quantify the impact of the disease,” Norcini said.
CATTLE FUTURES MIXED AMID FUND ROLL
CME live cattle futures settled mixed on Tuesday as funds bought, or rolled, deferred months contracts and sold spot December futures, traders said.
CME live cattle December settled down 0.050 cent at 132.050 cents per lb., and February closed at 133.825 cents, up 0.150 cent.
Traders expected U.S. Plains cash cattle to sell at least steady with the previous week’s price at $132 per cwt. However, some bullish investors believe improved packer margins could push cash cattle prices slightly higher.
HedgersEdge on Tuesday reported beef packer margins at a negative $28.70 per head, up from a negative $32.80 on Monday and negative $38.20 a week ago.
Cash cattle prices could be limited if the beef cutout is unable to maintain its current lofty levels. The USDA’s Tuesday morning choice wholesale beef price, or cutout, was at $205.32 per cwt., down 24 cents from Monday morning but up $1.10 from a week ago. Select was up 90 cents at $190.33.
CME feeder cattle prices were supported by steady to firm prices at the closely followed Oklahoma City auction. Cheaper corn prices at the Chicago Board of Trade and strength in deferred live cattle contracts also lent support to higher feeder cattle futures.
November closed up 1.175 cents per lb at 164.775 cents, and January ended at 165.075 cents, 1.225 cents higher.
