August 9, 2018 / 10:19 PM / 4 months ago

LIVESTOCK-Hog futures surge limit on technicals after contract lows

    By Michael Hirtzer
    CHICAGO, Aug 9 (Reuters) - Chicago Mercantile Exchange lean
hog futures         jumped as much as 6 percent on Thursday,
surging on technical buying after earlier dipping to contract
lows, traders said.
    Most active October lean hogs        climbed by their 3.000
cents per pound daily price limit, settling at 51.400 cents per
pound and notching the biggest gains in the contract's history.
    Several hog contracts fell to life-of-contract lows early in
the session, extending recent declines on pressure from
weakening prices for wholesale pork and hogs in cash markets.
    "When you get a market moving in the same direction forever,
you expect this type of action," Top Third Ag Marketing analyst
Craig VanDyke said of the hog futures gains.
    Additionally, there were hopes that the United States and
Mexico could agree to a revamped trade deal, potentially
boosting pork exports to the top market for U.S. pork.
    The economy minister from Mexico, which imposed tariffs on
U.S. pork imports in June, on Thursday said the country was
working to strike a deal on new rules for the auto industry.
            
    But with little definitive news that a North American Free
Trade Agreement was forthcoming, the rise in hog prices was
likely just chart-based buying, the traders said.
    "It's some optimism combined with oversold conditions," said
Tim Hughes, leader of the hog margin team at Commodity and
Ingredient Hedging.
    A few investors also might have been buying hog futures
contracts and selling cattle.
    CME October live cattle        finished up 1.950 cents at
109.050 cents per pound, recovering from a two-week low.
    The October cattle contract had surged to a record premium
over October hog futures, potentially triggering the cattle-hog
spreading, the traders said.
    CME September feeder cattle futures        settled down
0.725 cent at 149.025 cents per pound, easing after rising
sharply during Wednesday's session.

 (Reporting by Michael Hirtzer
Editing by James Dalgleish)
  
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