CHICAGO, Feb 12 (Reuters) - Chicago Mercantile Exchange lean hogs closed higher on Thursday, fueled by bargain hunting in the technically oversold market, traders said.
February, which will expire on Friday, closed 0.725 cent per lb higher at 61.950 cents, and April up 0.675 cent to 64.500 cents.
Before Thursday’s session, hog futures had a Relative Strength Index (RSI) of 23. A RSI below 30 suggests the market is oversold and subject to an upward correction.
“Other than technical factors, I don’t see a lot of positive fundamental news in the market,” said Brock Associates Inc analyst Doug Houghton. He cited soft cash and wholesale pork prices, partly due to port disruptions on the West Coast.
Thursday morning’s average market-ready or cash hog price in Iowa/Minnesota dropped $1.35 per cwt from Wednesday to $57.06, the U.S. Department of Agriculture said.
Separate USDA data showed the morning’s wholesale pork price at $72.30 per cwt, 51 cents lower than on Wednesday.
West Coast shipment delays crimped U.S. meat exports, which has resulted in a buildup of product for domestic consumption, analysts said.
They said packers are hesitant to pay more for hogs unless they can consistently sell the meat they produce.
CME live cattle contracts settled moderately higher on cash price optimism, but futures periodically encountered profit-taking led by lethargic beef sales, traders said.
February closed 0.500 cent per lb higher at 159.100 cents, and April up 0.025 cent to 151.125 cents.
Cash cattle bids in Kansas stood at $161 per cwt versus up to $164 asking prices, feedlot sources said. Last week, cash cattle in the U.S. Plains sold at $160 to $162.50.
Bullish investors believe the seasonal dip in cattle numbers may force processors to pay up for supplies, despite their poor margins and competitively-priced pork.
The morning’s choice wholesale beef price slipped 13 cents per cwt from Wednesday to $239.61. Select cuts dropped 61 cents to $235.75, USDA said.
Thursday’s beef packer margins were a negative $63.15 per head, compared with a negative $82.45 on Wednesday and a negative $65.05 per head a week ago, according to Hedgersedge.com.
Short-covering and fund buying furthered late-day CME live cattle futures gains.
CME feeder cattle rose on short-covering, technical buying and periodic live cattle market gains.
March and April closed at 200.300 cents per lb, up 1.550 cents and 1.600 cents respectively.