Friday 25 September 2009

CME Livestock Review: Hogs, Most Cattle Fade

Fri, Sep 25 2009, 18:51 GMT

CME Livestock Review: Hogs, Most Cattle Fade

CHICAGO (Dow Jones)--Chicago Mercantile Exchange hogs settled lower Friday on bearish fundamentals, sell stops and caution before the U.S. Department of Agriculture's quarterly hog report on Friday at 3 p.m. EDT.

The following are analysts' estimated averages and ranges for data's top three categories:

                             Average      Range
All hogs and pigs on Sep 1 98.2 97.4-99.0
Kept for breeding 97.4 96.5-98.2
Kept for marketing 98.3 97.3-99.1

Feeder cattle also finished lower. In addition, most live cattle contracts closed in slightly bearish territory. February pork bellies, the only contract that traded, ended higher.

Spillover from Thursday's losses and that evening's pork cutout decline undercut lean hogs from the outset. Worrisome hog kills and scant pork packer profit margins hastened October's and December's descent, which triggered sell stops.

Furthermore, U.S. stock market weakness and soft Chicago Board of Trade corn set would-be bulls on their heels.

By the same token, speculative buying on breaks tied to front-month discounts to CME's hog index cushioned those contracts' fall. Also, December benefited from spreading into the contract out of February.

Cash hog prices came in generally weak on Friday. Packers are expected to maintain cash pressure on Monday due to abundant supplies.

Market participants will factor in Friday's U.S. government pig report.

October hogs ended down 27 points at 49.95 cents a pound, and December closed down 32 points at 49.02 cents.

February pork bellies closed 67 points higher at 80.70 cents a pound on short covering, buy stops and the contract's oversold chart indicator.

Other belly contracts were unquoted.

Cattle Complex

CME live cattle closed mostly weak on slumping boxed beef prices, sell stops and cash cattle returns this week that came in just shy of last week's values.

Cash-basis cattle this week moved at $82 to mostly $84.50. Fed cattle last week brought $84 to mainly $84.50.

Cattle futures flip-flopped during the quiet session, stirred by follow-through selling from Thursday's futures slip and boxed beef prices' recent pullback.

USDA's midday Friday boxed beef data showed choice cuts fell $1.25 per hundredweight, and select items were down $0.99.

Cattle market participants will wipe the slate clean on Monday as they look forward to next week's cash cattle transactions.

On Monday, those in the live cattle pit who also trade lean hogs will watch the market's response to Friday's USDA hog report.

October live cattle ended down 5 points at 86.05 cents a pound, and December closed up 7 points at 85.35 cents.

CME feeder cattle ended lower on more selling from futures' retreat on Thursday, several contracts' premiums to CME's feeder cattle index and sell stops.

Some traders sold November and bought October and January on spreads.

October closed 52 points lower at 96.60 cents a pound, and November finished 55 points lower at 96.72 cents.

-By Theopolis Waters, Dow Jones Newswires; 312-341-5778;

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(END) Dow Jones Newswires

September 25, 2009 14:51 ET (18:51 GMT)

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