CHICAGO, July 11 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures fell about 3% on Thursday on sluggish cash markets, traders said, retreating after a two-session surge that lifted the August contract to a near-three-week high a day earlier.
CME August lean hogs settled down 2.550 cents at 79.175 cents per pound, one day after climbing to 82.850, the contract’s highest since June 20. October hogs ended down 1.650 cents at 71.600 cents.
“Hogs are trying to put in a bottom. But (the) cash (market) is not giving them a reason to do so,” said Alan Brugler, president of Brugler Marketing & Management.
The U.S. Department of Agriculture’s U.S. cash pork carcass cutout value was $1.40 lower at midmorning on Thursday, although the afternoon report showed a net increase of 57 cents.
Brugler noted that the July lean hog futures contract settled Thursday at 71.600 cents, at a premium to the latest CME lean hog index, which fell to 70.77 cents. The July contract must converge with the index at expiration.
Meanwhile, the USDA reported export sales of U.S. pork in the week ended July 4 at 11,300 tonnes, down 52% from the previous week and 53% from the prior four-week average. However, on a bullish note, shipments of 25,100 tonnes included 8,000 tonnes to China.
“Export sales were dismal for pork. But export shipments were decent, and China, with 8,000 tonnes of that, is exactly what we want to see,” said Craig VanDyke of Top Third Ag Marketing.
CME hog futures had soared in March and April on expectations that China’s swine fever outbreak would prompt China to boost purchases of U.S. pork. But the market erased those gains in May and June, pressured by ample U.S. hog supplies and lukewarm pork sales to China.
CME live cattle futures closed modestly higher Thursday in rangebound trade, supported by expectations for firmer cash cattle trade this week.
“We are seeking the cash market tighten up a little bit, and getting more current,” VanDyke said.
August live cattle futures settled up 0.250 cent at 107.875 cents and October ended up 0.350 cent at 109.325 cents.
CME feeder cattle also rose, bucking pressure from a 2% increase in Chicago Board of Trade corn futures.
CME August feeder cattle futures rose 0.275 cent to finish at 142.625 cents per pound.
The USDA reported export sales of U.S. beef at 21,500 tonnes, up 15% from the previous week and 26% from the prior 4-week average.
Reporting by Julie Ingwersen