August 4, 2017 / 8:23 PM / 6 months ago

LIVESTOCK-CME lean hog futures turn higher on cash discounts

    * Live cattle ends mostly lower
    * Feeder cattle finishes weaker

    By Theopolis Waters
    CHICAGO, Aug 4 (Reuters) - Chicago Mercantile Exchange lean
hogs settled higher on Friday, with buyers attracted to futures
that remained undervalued compared to prices paid by packers for
market-ready, or cash,  hogs, traders said.
    CME's hog index, a barometer for cash prices, for Aug. 2 was
87.11 per cwt.
    Bargain buying after recent losses and purchases by funds
contributed to futures advances.
    August        , which expires on Aug. 14, closed up 1.250
cents per pound to 83.225 cents. Most actively traded October
        ended 1.275 cents higher at 66.775 cents, and above the
10-day moving average of 66.330 cents.
    Lean hog contracts made headway despite Friday morning's 
softer cash and wholesale pork prices as hog numbers start to
build seasonally.                 
    The U.S. Department of Agriculture projected this week's hog
slaughter at 2.250 million head, up 11,000 from last week and
50,000 more than a year ago. 
    "I think we're living on borrowed time with these bigger
supplies around us, but the board (futures) doesn't seem to
think so," a Midwest hog merchant said.
    Some packing plants will be closed on Monday for a floater
holiday, said traders and analysts. Packers in August typically
give employees time off in exchange for work during winter
    CME live cattle contracts generally landed in bearish
trading territory on profit-taking and traders that sold
deferred months and bought August futures, said traders.
    August was also supported by its discount to prices paid by
packers for cash cattle this week at $116 to $119 per cwt. Last
week, cattle brought $117 to $118.  
    August         ended up 0.225 cent per pound at 115.450
cents per pound, and above the 100-day moving average of 115.407
cents. October         finished 0.725 cent lower at 114.100
cents, and December         0.725 cent lower at 115.175 cents.
    Some cash prices benefited from tight supplies in parts of
the U.S. Plains, said traders and analysts. 
    But, they said, seasonally lackluster wholesale beef demand
and increased cattle numbers in the months ahead discouraged
other packers from bidding up for animals.           
    Still, bullish investors believe cash and wholesale beef
values have bottomed out seasonally, with grocers featuring more
beef that is now competitively priced to pork. 

 (Reporting by Theopolis Waters)
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