Lean hog futures on the Chicago Mercantile Exchange closed lower on Thursday, shrugging off early support from a bullish U.S. government hog inventory report as traders appeared to focus instead on profit-taking at the end of the quarter and disappointing wholesale pork prices, traders said.
CME benchmark June lean hogs settled down 3.600 cents at 120.625 cents per pound after trading in a huge range, from 127.325 cents, a contract high established at the open, to a session low of 120.375 cents.
The hog market opened higher after the U.S. Department of Agriculture late Wednesday reported the U.S. hog herd at 72.2 million head as of March 1, down 2.3% from a year ago, a larger contraction than analysts expected.
“The report was bullish in every category,” said Dan Norcini, an independent livestock trader.
But hog futures quickly turned lower, a move traders attributed to profit-taking at the end of the month and quarter. Commodity funds hold net long positions in CME lean hog and live cattle futures, leaving the markets vulnerable to bouts of long liquidation.
Also, while wholesale beef prices rose steadily for most of March, trending higher ahead of the U.S. summer grilling season, pork prices were inconsistent.
“The pork … has not taken off just yet. There is some hesitation until we see that,” Norcini said.
In the cattle markets, CME live cattle futures closed lower, led by steep declines in feeder cattle futures in response to rising corn prices. Corn futures climbed after the USDA projected a drop in 2022 corn plantings, signaling higher feed costs for livestock.
CME June live cattle ended down 0.875 cent at 137.125 cents per pound, while May feeder cattle fell 2.350 cents to finish at 166.550 cents per pound.
