CHICAGO, Oct 2 (Reuters) - U.S. livestock futures were mixed on Wednesday, with hog contracts easing for the second day in a row on technical follow-through selling while cattle futures firmed.
The most-active December live cattle contract hit its highest in nearly two months.
Traders said futures prices for hogs had rallied too sharply compared to the cash markets on expectations that Chinese demand for pork imports would rise sharply due to African swine fever decimating their hog herds.
But the futures to cash spread had to be corrected as contracts neared expiration.
“You have got a monster premium in this market versus the cash,” said Craig VanDyke, senior risk manager at Top Third Ag Marketing. “That makes pulling the selling trigger a lot easier.”
December lean hog futures dropped 0.825 cents to 69.100 cents per pound at the Chicago Mercantile Exchange.
The contract also faced some technical resistance at its 100-day and 200-day moving averages, contributing to the weakness hanging over hog futures.
Traders will be scrutinizing the U.S. Agriculture Department’s weekly export sales report on Thursday to see if China has increased its purchases of U.S pork. A week ago, USDA reported that world’s biggest pork consumer and hog producer bought 3,375 tonnes of pork from Sept. 13-19, an amount that many traders viewed as disappointing.
Hog futures are highly sensitive to expectations for buying from China. African swine fever also has spread to Vietnam, South Korea and other countries and the Philippines confirmed new cases on Tuesday.
Cattle futures were supported by strength in the cash market.
December live cattle futures closed up 0.8 cent at 110.625 cents per pound. The contract peaked at 110.825 cents, its highest since Aug. 9, during the session.
November feeder cattle futures closed up 1.500 cents at 141.675 cents per pound. (Reporting by Mark Weinraub; Editing by Richard Chang)