By Meredith Davis
CHICAGO, Nov 6 (Reuters) – Chicago Mercantile Exchange hog futures ended lower on Wednesday in response to record-high hog weights that pressured wholesale pork prices, traders said.
On average, hogs in the Iowa-southern Minnesota market for the week ending Nov. 2 weighed 279.7 pounds. That was up 7.6 lb. versus a year earlier and easily topped the most recent record high of 278 lb. in April of 2013, based on U.S. Department of Agriculture data.
Cooler fall weather and less-costly feed are allowing hogs to quickly gain weight, said economists and analysts. Producers held back hogs longer to capitalize on prices that are higher than a year earlier, they said.
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“This is a big deal if you ask me because slaughter numbers are slowly creeping higher,” independent hog futures trader Dan Norcini said.
Increased weights and ample seasonal supplies are adding more tonnage to the retail sector, causing grocers to shop for product at lower prices.
Wednesday afternoon’s wholesale pork price was at $93.58 per hundredweight, down 26 cents from Tuesday, USDA said.
Separate U.S. government data estimated pork packers from Monday to Wednesday processed 1.308 million hogs, 15,000 more than last week and 9,000 more than the same period last year.
Despite sufficient supplies, some packers on Wednesday raised cash bids to secure hogs for the rest of this week’s production.
USDA reported Wednesday afternoon’s hog price at the closely watched Iowa-Minnesota market at $80.93 per cwt., up 89 cents from Tuesday.
December hogs ended down 0.900 cent at 87.350 cents per lb. February hogs ended 0.950 cent lower at 90.875 cents.
LIVE CATTLE NARROWLY MIXED
CME live cattle finished narrowly mixed as steady-to-weak cash price expectations weighed on December futures while anticipation of tighter supplies lifted the February contract.
December settled down 0.025 cent at 132.025 cents per lb., and February closed at 133.900 cents, up 0.075 cent.
Cash cattle bids were at $129 per cwt. Cattle owners has no interest in selling at that price, feedlot sources said. Cash cattle last week sold at mostly $132.
With beef margins still in the red, packers will be reluctant to spend more for cattle. And, some wonder if grocer demand will falter with wholesale prices at current levels.
The wholesale choice beef price Wednesday afternoon was down 89 cents per cwt. at $204.56, while select rose 64 cents to $190.62.
“Choice (beef) is coming down,” Dominic Varricchio, a broker at Schwieterman, Inc said. “Perhaps we’re seeing demand for choice topping off.”
Some packers reduced slaughter rates to offset higher cash prices and improve margins.
So far this week, USDA estimated 352,000 head of cattle were slaughtered, 7,000 less than in the same period last week and 12,000 fewer than a year ago.
“Packers are already losing enough money, they want to see things slowed down,” an Kansas-based livestock trader said.
CME feeder cattle continued to be supported by weaker Chicago Board of Trade corn futures.
November closed up 0.075 cents per lb. at 164.850 cents, and January ended at 165.550 cents, 0.475 cents higher.
