Hog Futures Retreat After Trading at Three-week High; Cattle Rise

U.S. lean hog futures fell on Wednesday, retreating from a three-week high on technical selling and a U.S. Department of Agriculture (USDA) report showing a jump in average hog weights in Iowa and southern Minnesota, analysts said.

Live cattle and feeder cattle futures rose on short-covering and bullish macroeconomic data.

Live hogs closed lower, snapping a four-session advance. Most-active CME February hogs settled down 0.625 cent at 70.900 cents per pound while December hogs were down 0.675 cent to 65.075 cents.

Futures fell on news that the USDA reported the average hog weight for the Iowa/southern Minnesota/South Dakota reporting area at 285.5 pounds, up 1.3 pounds from the previous week.

"This is a sharp increase and raises the concern about lax packer kill schedules," said Rich Nelson, chief strategist with Allendale Inc.

Cattle futures rose on short-covering despite a drop in boxed beef prices. Choice-grade wholesale beef prices were down $2.08 to $206.55 per cwt, the USDA said.

"It was short-covering today and maybe unwinding of long hog/short cattle (spread positions) that gave us a bit of a push," said Don Roose, president of Iowa-based U.S. Commodities.

CME February live cattle were up 0.925 cent to 126.600 cents per pound and December cattle up 0.825 cent to 120.475 cents. CME January feeder cattle were up 1.075 cents to 155.575 cents per pound.

Also supportive, U.S. gross domestic product expanded at a 3.3 percent annual rate in the third quarter, the Commerce Department said.

The report followed news on Tuesday that U.S consumer confidence surged to a near 17-year high in November.

Both indicators were seen as bullish for consumer demand for beef, Nelson said.

"The whole demand issues has been a strong factor for us in alleviating the excess product of meat in the industry," Nelson said.

 

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