July 17, 2017 / 9:59 PM / 7 months ago

LIVESTOCK-CME lean hogs draw support from cash price discounts

    * Live cattle ends mostly firmer
    * Feeder cattle closes higher

    By Theopolis Waters
    CHICAGO, July 17 (Reuters) - Chicago Mercantile Exchange
lean hog futures finished higher on Monday, helped by their
discounts to cash prices and technical buying, traders said.
    Thinly-traded July        , which will expired at noon CDT
(1700 GMT), settled down 0.200 cent per pound at 92.400 cents
and almost par with CME's hog index for July 13 at 92.78 cents.
    Most-actively traded August         closed 0.875 cent per
pound higher at 80.775 cents. October         finished 0.875
cent higher at 68.050 cents, and above the 100-day moving
average of 67.368 cents.
    Fundamentally, market bears contend that cash prices are
close to peaking seasonally as more hogs come to market in the
months ahead.         
    Bullish investors argue that two new packing plants slated
to open during the second half of the year will absorb the extra
    Allendale chief strategist Rich Nelson said that market
participants for the most part are patiently waiting for cash
prices to post a seasonal top rather than panicking.
    Investors continue to monitor wholesale pork demand led by
record-high prices for pork bellies in the midst of the summer
bacon-lettuce-tomato sandwich season.         
    The U.S. Department of Agriculture's daily hog slaughter
report on Monday suggests a Midwest packing plant may have been
offline for maintenance.          
    Most CME live cattle contracts landed in positive trading
territory after some investors sold August futures and
simultaneously bought deferred months while awaiting this week's
cash prices, said traders.   
    August         ended 0.850 cent per pound lower at 116.950
cents. October         closed up 0.050 cent to 118.625 cents,
and December         up 0.250 cent to 119.250 cent.
    Traders sold August futures despite the first uptick in both
choice and select wholesale, or cutout, beef prices since June
    "The cutout being up today (Monday) may be short-lived
because we're still in the 'dog days of summer' that normally
hurt meat demand," a trader said.
    He added that some processors may be in the market for
cattle whose numbers seems to have tightened in parts of the
U.S. Plains as beef prices at wholesale come down from their
lofty levels a few weeks ago.
    Last week market-ready, or cash cattle, in the U.S. Plains
moved at mostly $118 to $121.50 per cwt, up as much as $4 from
the week before.
    Investors await Wednesday's Fed Cattle Exchange sale of
2,912 head animals that a week earlier brought $117.25 to
$118.75 per cwt.
    Firmer CME live cattle futures and sharply higher cash
feeder cattle prices pulled up CME feeder cattle futures.
    August feeders         ended up 0.150 cent per pound at 
154.825 cents.

 (Editing by G Crosse)
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