By Theopolis Waters
CHICAGO, May 16 Chicago Mercantile Exchange lean
hog futures on Tuesday reached their highest level since
mid-February, fueled by strong cash and wholesale pork prices,
June futures led gainers after investors bought that
contract and sold deferred months, prompted by bullish market
fundamentals, traders said.
June closed 1.475 cents per pound higher at 78.725
cents, and July 1.125 cents higher at 79.475 cents.
Processors purchased hogs while taking advantage of their
profitable margins. They were also able to sell pork to
retailers that are gearing up for U.S. Memorial Day holiday
"Packers can afford to pay up for hogs and still make money,
and the cutout was up a bit," said Brock Associates Inc analyst
Tuesday afternoon's average cash hog price in Iowa/Minnesota
was at $70.76 per cwt, $1.05 higher than on Monday, the U.S.
Department of Agriculture said.
USDA data on Tuesday afternoon reported the average
wholesale pork price up $1.11 cwt from Monday to $85.08, mostly
led by $6.50 higher pork bellies.
CATTLE FUTURES FALL
CME live cattle sank to a five-week low on weaker
cash price outlook and sentiment that wholesale beef demand is
about to top out seasonally, traders said.
However, they said bargain buying and futures' discounts to
this week's expected cash prices lifted contracts from session
June closed 0.550 cent per pound lower at 121.900
cents. August closed 0.550 cent lower at 118.250 cents,
and below the 20-day moving average of 118.320 cents.
Tuesday afternoon's average wholesale beef price, or cutout,
rose 48 cents per cwt to $249.88 from Monday. Select cuts
dropped $1.11 to $224.39, the USDA said.
Market-ready, or cash, cattle last week brought $137 to $138
per cwt, which was down from $140 to $147 a week earlier.
Investors look for Wednesday morning's Fed Cattle Exchange
sale of roughly 2,300 animals to set the tone for this week's
Despite their impressive margins, packers might cut cash
bids in anticipation of a potential pullback in beef demand,
which typically subsides after most grocers buy all they need
for the upcoming holiday, a trader said.
Average beef packer margins for Tuesday were a positive
$109.45 per head, up from a positive $85.45 for Monday, as
calculated by HedgersEdge.com.
CME live cattle selling and steady-to-lower cash feeder
cattle prices dragged down the exchange's feeder cattle
May feeders settled 1.575 cents per pound lower at
(Reporting by Theopolis Waters; Editing by Leslie Adler)