CHICAGO, July 22 (Reuters) - Chicago Mercantile Exchange (CME) feeder cattle futures inched upward on Monday, as corn futures fell sharply and traders hoped that feed costs will continue to remain under pressure.
Meanwhile, lean hog futures faced choppy trading on Monday as the market wrestles with continued expectations for - but no clear signs yet of - increased demand for American pork from China, the world’s top importer.
Hog traders have been expecting China, the world’s biggest hog producer, to ramp up pork imports later this year after a fatal hog disease killed millions of pigs there and lifted pork prices.
Increased purchases of U.S. pork by China would help reduce American meat inventories that swelled as farmers expanded herd sizes and meat packers slaughtered more animals.
“On Friday there was optimism that maybe we were getting closer to some sort of trade with China ... Now it looks like they’re not making a move,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
CME August lean hog futures closed down 0.65 cents at 83.225 cents per pound, while October hogs climbed 0.275 cents to 79.2 cents.
U.S. cattle futures were supported by a sharp drop in U.S. corn and soybean futures on Monday, as hopes of Chinese grain buying fizzled and forecasts of cooler weather in the U.S. Midwest eased concerns about crop yield losses.
Cattle futures have been undervalued compared to the cash market, which spurred some buying on Monday, said Karl Setzer, commodity market risk analyst for AgriVisor.
Nearby live cattle contracts, Roose said, were supported by firm offers for cash feedlot cattle this week. Cattle in the southern Plains were offered at around $113 per cwt this week, and $114 in the Midwest, he said, noting the premium to August futures.
Back months in live cattle also were lifted by expectations for a slowing herd expansion.
“The cattle inventory report signaled that our six years of expansion may be ending. Our typical expansion cycle in cattle is seven years,” Roose said.
CME August live cattle futures closed up 0.85 cent at 108.45 cents per pound. CME October cattle rose 0.65 cent to 109.15 cents per pound.
CME August feeder cattle futures advanced 2.2 cents to 142.175 cents per pound. September feeders edged up 2.625 cents to 142.425 cents per pound. (Reporting by P.J. Huffstutter in Chicago; additional reporting by Karl Plume in Chicago)