By Theopolis Waters
CHICAGO, Sept 27 (Reuters) – Chicago Mercantile Exchange hog futures on Friday settled higher as investors tweaked positions before the U.S. Department of Agriculture’s quarterly hog report to be issued on Friday at 2 p.m. CDT.
Analysts expect the report to show fewer hogs were on U.S. farms in the last quarter due in part to the spread of the deadly Porcine Epidemic Diarrhea virus (PEDv). While pig loss from PEDv may lead to a near-term shortage of hogs, analysts expect production to increase longer term because of lower feed costs.
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Profit taking, mixed cash hog prices and weak wholesale pork values limited futures’ advances, traders and analysts said.
Some packers bought supplies for early next week’s slaughter. Other processors lowered cash hog bids and curtailed slaughter to offset near-term tight supplies.
Friday morning cash hog prices in the western Midwest were $2.06 per hundredweight higher than on Thursday at $94.54 per cwt, but 62 cents lower in the eastern region at $89.72, according to the USDA.
Separate U.S. government data showed the wholesale pork price, or cutout, Friday morning at $101.96 per cwt., down 40 cents from Thursday.
CATTLE UP ON CASH OPTIMISM
Investors adjusted positions heading into the last trading day for the quarter on Monday.
And traders bought live cattle futures in anticipation of a minimum steady cash trade compared to last week’s sales.
Fewer cattle may cause packers to pay at least steady money for supplies despite their negative margins and sluggish wholesale beef demand, traders said.
Cash cattle bids in Texas and Kansas stood at $123 per cwt. against $127 asking prices, feedlot sources said. Last week, cash cattle sold at $124 in the southern Plains and at $125 in Nebraska.
USDA data on Friday morning showed the wholesale choice beef price, or cutout, at $192.85 per cwt., down 75 cents from Thursday. Select cuts slipped 14 cents to $176.91.
Estimated margins for U.S. beef packers on Friday were a negative $7.85 per head, compared with a negative $5.55 on Thursday and a negative $0.60 a week ago, according to HedgersEdge.com.
October closed up 0.550 cent per lb. to 128.250 cents. December finished at 132.075 cents, 0.500 cent higher.
Late-session profit taking pared earlier CME feeder cattle gains.
October ended down 0.250 cent per lb to 164.125 cents while November settled at 164.925 cents, 0.225 cent lower.
