The pork trade
LEAN HOGS on the CME finished up on Monday.
JULY’12LH futures closed at $95.450/cwt; up $2.425/cwt.
AUG’12LH futures finished $2.025/cwt lower at $93.225/cwt.
The DEC’12LH contract closed at $78.425/cwt; up $0.575/cwt.
A rise in grain prices, an indicator of higher feed costs, underpinned Monday’s rally.
Pit sources said that higher feed costs can deter livestock producers from expanding production.
Hog slaughter may again be below the year-ago figure for a second consecutive week following a six-weeks period from late April through the end of May when it averaged 4.5 per cent above a year-ago.
USDA’s quarterly hogs and pigs report in March projected supplies to average nearly 2 per cent above a year ago for the second quarter.
Hog futures staged a sharp rally on fresh signs of tightening supplies and increasing summer demand for the grilling season.
Still, there are signs the industry is struggling from supplies of meat that continue to outweigh demand.
The rally recovered steep losses from Friday, when traders took profits from long positions ahead of the weekend.
Monday, June 18 USDA put the pork cutout value at 94.33; up 0.21.
According to HedgersEdge.com, the average packer margin was placed at a negative $7.95/head based on the average buy of $72.89/cwt vs. the breakeven of $69.99/cwt.
The latest CME lean hog index was estimated at 95.25; up 0.96.
USDA on Monday estimated the daily processing at 391,000 head vs. 386,000 head last Monday and 394,000 a year ago.
USDA put the pork carcass cutout at $77.94/cwt, off $1.05/cwt but $0.53/cwt higher than a week ago.
Source: Argentine Beef Packers S.A.