September 24, 2010

 

CME hog futures end lower on bearish fundamentals; cattle steady

 

 

CME hogs futures Thursday closed lower on bearish market fundamentals, while live cattle ended steady to weak while feeder cattle posted a mostly firm settlement.

 

Lean hog futures jumped initially, spurred by those who bought back previously sold positions or short covering. Also, electronic-traded CME hogs' strength in overnight trading took their pit-traded brethren along for the ride.

 

Initial hog futures buying interest eventually succumbed to selling, prompted by Wednesday's 45-cent-per-hundredweight wholesale pork price withdrawal. Steady to as much as US$1 per hundredweight lower cash hog prices Thursday exerted added futures pressure.

 

Producers are marketing hogs earlier, and at heavier weights, due to cooler weather that is driving up animals' weight gain rates and generating more fresh meat for the retail sector.

 

Subsequent floor-traded hog declines forced spot-October and nearby-December below their respective 78.40-cents and 76.10-cents Wednesday lows, which touched off pre-placed orders to sell. Sell orders were also tripped in the December contract after it fell through the 75.91-cent 10-day moving average support floor.

 

Spot October hogs ended at 78.42 cents a pound, down 0.27 cent, or 0.3%. Nearby December finished off 0.30 cent, or 0.4%, at 76.02 cents.

 

Meanwhile, floor-traded CME live cattle ended steady to weak on spreading. Some in the pit were also skittish about a possible cattle supply build-up moving forward based on last Friday's USDA cattle-on-feed report.

 

Live cattle contracts gained at first on short covering and sentiments that Wednesday's market losses were overdone. Speculative bulls also targeted spot-October and nearby-December price discounts compared with this week's $98-per-hundredweight cash cattle sales.

 

However, futures peeled back after more sellers than buyers entered the lightly traded market. October and December at one point sank to 5 1/2 bottoms after both months slipped beneath their respective 95.90-cents and 98.10-cents Wednesday lows, which touched off orders to sell.

 

Spot October live cattle ended down 0.05 cent a pound, or 0.05%, at 96.12 cents. Nearby December finished up 0.05 cent, or 0.05%, at 98.25 cents. February ended down 0.22 cent, or 0.2%, at 100.05 cents.

 

Feeder cattle closed mostly firm on short covering. Also, traders purchased nearby-October and sold spot-September on spreads before the spot month expires on Sept. 30.

 

Spot September feeder cattle ended down 0.15 cent, or 0.1%, at 109.10 cents. Most-actively traded October finished up 0.27 cent, or 0.3%, at 109.30 cents. And, November closed up 0.15 cent, or 0.1%, at 109.85 cents.