June 22, 2018 / 9:54 PM / 10 months ago

LIVESTOCK-Hog futures sink on weak cash markets, packer margins

    By Karl Plume
    CHICAGO, June 22 (Reuters) - Chicago Mercantile Exchange
lean hog futures         settled mostly lower on Friday as
falling cash hog prices and poor packer margins weighed on the
market, traders said.
    Worries over slowed pork export demand due to threatened
retaliatory tariffs by key trading partners, including Mexico
and China, also weighed on the hog market.
    CME July lean hogs        settled down 0.650 cent at 79.825
cents per pound and actively traded August        ended 0.350
cent lower at 75.375 cents.
    "We've got some pushback from the packers due to margin
concerns and we've got some trade issues, so we've got a problem
brewing for the hog market right now," said Rich Nelson, chief
strategist with consultancy Allendale Inc. 
    "Cash hogs have been down in four of the past five trading
sessions," he said.
    Average prices for cash hogs in the closely followed Iowa
and southern Minnesota market were $2.61 per cwt lower on
Friday. For the week, prices fell more than $4.00, according to
the U.S. Department of Agriculture.          
    Packer margins have improved slightly with the lower hog
costs, but remain negative. Livestock marketing advisory service
HedgersEdge.com LLC estimates the average pork packer margin at
a negative $1.82 per head on Friday, compared with a negative
$8.75 a week ago.        
    CME live cattle futures         ended mixed on Friday, with
nearby contracts weighed down by ample supplies of animals and
by a weakening cash cattle market, although the market's
discount to cash prices limited losses, traders said.
    Meanwhile, deferred-month cattle contracts were supported by
positioning ahead of the USDA's monthly cattle on feed report,
which was released after the close, they said.
    Market-ready cattle at U.S. Plains feedlot markets traded
this week from $108 to $110 per cwt, compared to $110 to $113
last week.
    The USDA report showed ranchers in May drove more cattle
into U.S. feedlots than expected compared with the same period a
year ago, which could be mildly bearish to futures on Monday,
analysts said.             
    CME August live cattle        settled down 0.225 cent at
105.900 cents per pound after failing to breach chart resistance
at its 100-day moving average. Back-month contracts were up as
much as 0.575 cent.
    Feeder cattle futures         ended higher, supported by
cheap feed prices as corn futures       hovered just above
five-month lows reached earlier this week.
    CME August feeders        were up 0.725 cent at 149.200
cents per pound.

 (Additional reporting by Theopolis Waters in Chicago
Editing by Leslie Adler)
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