CHICAGO, July 10 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures neared a three-week high on Wednesday, buoyed by a mix of technical buying and ideas that a glut of U.S. hog supplies was showing signs of tightening, traders said.
Fears of an expansion in Asia of the African swine fever (ASF) outbreak in China added support.
CME’s most-active August lean hogs contract settled up 2.650 cents at 81.725 cents per pound after reaching 82.850, its highest since June 20.
October hogs ended up 2.250 cents at 73.250 cents, a day after dipping to 67.425 cents, the contract’s lowest since February.
Hog futures soared in March and April on expectations that China’s swine fever outbreak would prompt China to boost purchases of U.S. pork. But the market erased those gains in May and June, falling in response to ample U.S. hog supplies and lukewarm pork sales to China.
“From a technical analysis perspective, those hogs (futures) were grossly oversold. The hogs have completely retraced the gains they put on when the news came out that China’s ASF situation was deteriorating,” said Dan Norcini, an independent livestock trader.
“You saw the market snap back from a move that got pushed too far to the downside,” Norcini said.
Improving cash hog values lent support. Cash hog prices in the closely watched Iowa and southern Minnesota market rose $1.36 on Wednesday.
“We are much on the verge of working our way through those excessively large slaughter numbers. I think you’re seeing that in the fact that packers are beginning to put better money on the table for hogs,” Norcini said.
CME live cattle futures declined in rangebound trade, pressured by soft wholesale beef values as brokers awaited the start of cash cattle trade. The USDA quoted choice boxed beef cutout on Wednesday at $214.42 per cwt, down $0.31 from Tuesday, while select cutout fell $1.20 to $190.89.
August live cattle futures settled down 0.500 cent at 107.625 cents and October ended down 0.325 cent at 108.975 cents.
CME August feeder cattle futures fell 0.525 cent to finish at 142.350 cents per pound.
Traders were waiting to see how Chicago Board of Trade corn futures react to Thursday’s monthly USDA supply/demand report. Analysts on average expect the government to raise its U.S. 2019/20 corn ending stocks forecast, but estimates varied widely. (Reporting by Julie Ingwersen; editing by Grant McCool)