Chicago Mercantile Exchange hogs closed mostly higher Monday following Friday’s hefty pork-cutout-price increase and bullish U.S. Department of Agriculture monthly cold-storage report on total pork results.
Live cattle ended generally firm, and feeder cattle finished slightly above board. But February pork bellies, the only contract that traded, settled lower.
Lean hogs rose from the outset fueled by the surprising strength Friday in pork-cutout prices. That comes at a time when retail demand for fresh pork is expected to wane heading into Thursday’s Thanksgiving Day holiday.
Pockets of firmness for cash-hog prices and profitable pork-packer profit margins were more positive fundamental features. December and February peaked at multi-month highs with the help of buy stops and December/June bull spreads.
Traders also bought February and sold December and April on spreads during the otherwise tranquil session.
And a slump by the U.S. dollar and a steady rise in U.S. equities motivated distant-month hog bulls.
Steady-to-firm cash-hog prices are forecast for Tuesday.
Packers who have their near-term needs met will maintain at least steady bids. Others, however, may spend more for hogs depending on inventories heading into the weekend.
Market movement could become choppy over the next couple of days as traders settle their business affairs in advance of the upcoming holiday.
December hogs ended 70 points higher at 58.30 cents a pound and earlier peaked at a four-month high. February finished 115 points higher at 65.52 cents. The contract at on point reached a 5 1/2-month top.
February pork bellies ended 132 points lower at 85.80 cents on sell stops and 10-day moving-average support loss.
Other belly months were unquoted.
CME’s weekly belly storage report will be released on Tuesday after 5 p.m. EST.
Cattle Complex
Live cattle closed mostly firm on spreading into February out of December and April on Friday’s bullishly construed USDA monthly cattle-on-feed report and buy stops.
Cattle contracts jumped at first due to buying leftover from modest advances by futures Friday.
Spot-December and nearby-February gained more ground after both months triggered buy stops, especially after the nearby contract overcame 10-day moving average resistance.
Live cattle received extra backing from the crumpled U.S. dollar, corn’s short-lived rise on the Chicago Board of Trade and the run-up in U.S. equities.
Nevertheless, beef futures eased from morning tops due to sporadic profit-taking. Sell stops allowed live cattle to recede as the session wore on.
And, bullish traders gradually migrated toward the pit’s outskirts because of uneasiness about how this week’s cash-cattle prices will play out.
Cash-basis cattle last week moved at $82 to $84 per hundredweight, compared with generally $83 the week before.
Furthermore, there is lingering concern regarding wholesale beef sales during the holiday-shortened workweek.
The federal government midday Monday quoted boxed-beef choice cuts up $0.36 per hundredweight, and select items were steady at $0.01.
Nevertheless, beef packers savor profitable margins, which could prompt them to raise bids for cattle if they are forced to do so.
The latest operating margin index for beef packers was plus $17.25 per head, compared with plus $10.50 the previous day.
Another day of waiting is in store for those anticipating this week’s fed-cattle transitions. Meantime, traders who plan to make an early holiday exit will likely square positions beforehand, which could whip up market volatility.
December live cattle closed up 10 points at 84.05 cents a pound, and February finished up 40 points at 85.82 cents.
Feeder cattle closed firm on front months that were at discounts or inline with CME’s feeder cattle index, CBOT corn’s eventual slide from morning highs and January’s oversold technical indicator.
January and March also triggered buy stops after both months cracked their respective 10-day moving-average resistance barriers.
January feeder cattle ended up 20 points at 92.87 cents, and March feeders closed up 32 points at 93.90 cents.
Source: www.cattlenetwork.com
www.PerryFarmsGrassFedBeef.com
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