CME Livestock Review: Funds, Cash Launch Hogs To New Highs

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CHICAGO (Dow Jones)--Fund buying and supportive cash hog prices catapulted CME hogs to new contract highs Monday.

Lean hogs began the post-Easter holiday session on a strong note, lifted by Friday's modest wholesale pork carcass price increase. And some packers Monday paid as much as $3 per hundredweight more for cash hogs than they did late last week.

The prospect of fewer hogs because of a normal seasonal dip in numbers, along with the likelihood of increased pork interest tied to grilling, contributed to front months' runup to fresh contract highs.

Meanwhile, spreaders bought April and sold June and October. And, some traders bought lean hogs and sold live cattle on spreads. Spreads involve trading two or more months at the same time while taking advantage of price differences among them.

Nearby-April hogs closed up 2.10 cents a pound, or 2.8%, at 76.22 cents. Most-actively traded June ended 1.67 cents higher, or 2.0%, at 85.05 cents.

CME pork bellies ended up sharply on spillover buying in the adjacent hog pit. May and July bellies triggered pre-placed buy orders after both months surpassed recent highs on their way to fresh contract highs.

Traders await CME's weekly belly storage report that will be available on Tuesday after 5 p.m. EDT.

Spot-May pork bellies closed 1.82 cents higher, or 1.9%, at 98.52 cents. July finished 1.00 cents higher, or 1.0% at 100.00 cents.


Cattle Complex

Live cattle at the CME settled higher on fund buying and cash cattle price confidence.

Cattle contracts rose from the start, spurred by spillover from futures' advances last Thursday. April and June climbed to two-week tops after both months moved beyond Thursday's highs.

And spreaders purchased April and sold June while others bought June and sold August. Traders marked time by working spreads while they waited for this week's cash trade to develop.

No cash-basis fed cattle bids or asking prices were reported. Cash cattle last week brought mainly $96 per hundredweight, compared to mostly $96 to $97 the week before.

Those who were supportive of futures expect no-worse-than-steady cash cattle returns this week, based on the market's positive mood Monday and still-profitable beef packer margins. There was also the notion that fed cattle might be in short supply this week following last week's rather brisk sales.

And an admitted market bull contends that, even though retail beef buying interest has sputtered lately, he sees demand picking up as more and more people focus on cooking outdoors.

Spot-April ended up 0.67 cent a pound, or 0.7%, at 97.32 cents. Nearby-June also closed up 0.67 cent, or 0.7%, at 94.20 cents.

Pit-traded CME feeder cattle closed sharply higher and earlier hit fresh contract highs on live cattle's upswing. April and May feeders immediately triggered pre-placed buy orders above the market after both months surpassed recent highs.

And spreaders bought feeder cattle and sold live cattle.

Nearby-April feeders ended 2.27 cents higher, or 2.1%, at 112.65 cents. Most-actively traded May closed 1.42 cents higher, or 1.3%, at 114.12 cents.


-By Theopolis Waters, Dow Jones Newswires; 312-347-4965; theopolis.waters@dowjones.com




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