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April 6, 2010

 

CME hogs launch to new highs on fund buying

 

 

Fund buying and supportive cash hog prices catapulted CME hogs to new contract highs Monday (April 5).

 

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 US$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' run-up 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.

 

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.

 

Meanwhile, 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.

 

Cash cattle last week brought mainly $96 per hundredweight, compared to mostly $96 to $97 the week before.

 

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.

 

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.

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