CME Livestock Outlook: Lean Hogs, Cattle Called Higher

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KANSAS CITY (Dow Jones)--Chicago Mercantile Exchange lean hog futures Wednesday are called higher on continued strength in the cash markets and spill-over support from strong gains in overnight live cattle trading.

The front hog months April through July are expected to see the biggest gains in response to the sharply higher cash prices paid Tuesday and a reversal from that day's mostly lower closes.

Gains in the deep deferred contracts may be limited by hedge sales and light trading in those months.

Triple-digit gains were made in overnight Globex trading in the April and June contracts. The gains negated bearish chart signals left on Tuesday.

The average weight for barrows and gilts in Iowa/southern Minnesota last week was reported early Wednesday at 270.2 pounds, up just 0.2 pound from the previous week but 1.1 pounds above a year ago. A broker said weights may begin a seasonal decline this week if producers sell enough hogs at the higher prices to become more current on their marketings.

Belly futures are seen flat to firm on spill-over from gains in the other livestock pits.


Cattle Complex


Chicago Mercantile Exchange pit traded live cattle and feeder cattle futures prices Wednesday were expected to open higher after a surprising cash-market trade late Tuesday that sent Globex markets higher.

Cash cattle jumped as much as $4 per hundredweight late Tuesday and Tuesday evening, sending hedged feeders into the Globex market to lift their hedges, brokers said. However, a lack of volume pushed Globex prices significantly higher, and some brokers expected Globex strength to abate somewhat before the opening of pit trading.

Cattle traded in the Plains at $98 to mostly $100 live and at $160 to $162 dressed.

Up until the cash trading, futures prices moved lower from Monday's strong rally as traders awaited some outside reason to take them higher again. It appears they got the direction they were looking for from the cash market, brokers said.


(To access the daily livestock market data recap report, keyword search for "Livestock Market Fundamental Data Recap.")


-By Lester Aldrich, Dow Jones Newswires; 913-322-5179 lester.aldrich@dowjones.com


-By Curt Thacker, Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com




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