LIVESTOCK-US hog futures slide as supplies seasonally increase

Wed Aug 21, 2013 3:30pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* CME live cattle futures mostly lower
    * Feeders mostly down, follow live cattle futures
    * USDA cold storage report to be issued Thursday
    * USDA monthly cattle-on-feed report due Friday

    By Theopolis Waters
    CHICAGO, Aug 21 (Reuters) - Chicago Mercantile Exchange hog
futures dropped on Wednesday in response to lower cash hog
prices that were pressured by a season increase in supplies,
traders and analysts said.
    The U.S. Department of Agriculture on Wednesday morning
reported the average hog price in the most-watched
Iowa/Minnesota market slumped $1.94 per hundredweight (cwt) from
Tuesday to $91.45.
    From Monday to Wednesday, packers processed 1.287 million 
hogs, up 22,000 from last week and 11,000 more than a year ago
for the same period, according to USDA.
    Scheduled pork plant closures during the Sept. 2 U.S. Labor
Day holiday will reduce packers' need for hogs. Also, grocers
are close to having what the meat they need for their holiday
promotions.
    Government data on Wednesday morning showed the wholesale
pork price, or cutout, at $101.75 per cwt, down 71 cents from
Tuesday.
    Fund liquidation developed when CME October and December
hogs fell below their respective 10-day moving averages of 86.44
and 83.26 cents.  
    October and December hog futures ended 1.125
cents lower at 85.825 and 82.625 cents per lb, respectively.
    USDA will release its monthly cold storage report on
Thursday at 2 p.m. CDT (1900 GMT), which will include total U.S.
pork and beef inventories in July.
    
    PRICEY CATTLE UNDER PRESSURE 
    Other than CME August live cattle futures, cattle futures
closed lower pressured by ideas their next move is down, traders
and analysts said.
    "This is a market that's going to struggle every time we get
above the 130-cents mark in the deferreds," CHS Hedging market
analyst Steve Wagner said.
    The prospect that tight cattle supplies might convince
packers to pay at least steady money for cattle lifted the
spot-August contract. 
    A few cash cattle bids surfaced in the southern U.S. Plains 
at $121 per cwt against $125 and higher asking prices from
sellers, feedlot sources said.
    Last week, cash cattle in Texas and Kansas traded at $123
per cwt, and traded in Nebraska at $125 then.    
    Lower wholesale beef prices, as supermarkets have much of
what they need for Labor Day features, limited the advance in
August futures.
    The cutout can go higher, but upward momentum tends to fade
after reaching the $200 per cwt level, said Wagner.
    Wednesday morning, the government quoted the wholesale
choice beef price, or cutout, at $195.27 per cwt, down 33 cents
from Tuesday. Select cuts dropped 66 cents to $184.16.
    Investors await USDA's monthly cattle-on-feed report on
Friday. 
    Analysts expect the report to show the feedlot cattle
inventory, as of August 1, was below a year ago for the 12th
straight month due to a smaller herd from which to draw cattle.
 
    Spot August live cattle ended up 0.300 cent at
124.150 cents per lb. Most-actively traded October 
closed down 0.175 cent at 127.975 cents and December slipped
0.100 cent to 130.475 cents.
    CME feeder cattle spot August rose to stay near the
exchange's feeder cattle index, which was at 155.25 cents.
    Weak deferred live cattle contracts and higher corn prices
pressured remaining feeder cattle futures.
    Spot August feeder cattle closed at 155.575 cents,
up 0.175 cent per lb. 
    Most-actively traded September closed down 0.550
cent at 157.700 cents and October settled down 0.400
cent at 160.075 cents.