CME lean hogs surge on wholesale, cash market strength
By Renee Hickman
CHICAGO, Oct 29 (Reuters) -Chicago Mercantile Exchange lean hog futures hit contract highs for a second day in a row on Tuesday as tighter-than-expected U.S. supplies kept wholesale and cash markets strong, according to analysts.
Live cattle and feeder cattle futures lost ground on profit-taking as beef cutout values fell, analysts said.
CME December lean hog futures LHZ24 hit a contract high of 83 cents per pound before settling up 2.2 centsat 82.825 cents per pound.
"I think it's just a function of how firm the wholesale market and cash hog market has been up to this point," said Altin Kalo, chief economist at the Steiner Consulting Group.
CME's Lean Hog Index .IHX, a two-day weighted average of cash prices, rose to 85.55 cents per pound, its highest reading in about seven weeks.
Low pork prices in August made the meat attractive to retailers, who loaded up on it, Kalo said. Traders expected an increase in supply that has not materialized, he said.
In cattle, meanwhile, futures fell on profit-taking following a rally on Monday and on lower beef cutout values, Kalo said.
The choice boxed beef cutout fell $2.89 to $320.61 per hundredweight, the U.S. Department of Agriculture (USDA) reported Tuesday afternoon. Select boxed beef prices dropped $2.22 to $289.96 per cwt.
Beef packers were earning an estimated$54.35 per head, down from $58.40 on Monday and from$75.40 a week ago, according to livestock marketing advisory service HedgersEdge.
December live cattle LCZ24 ended down 1.325 cents at 187.950 cents per pound, while November feeder cattle futures FCX24 settled down 2.6 cents at 246.600 cents per pound.
Reporting Renee Hickman; Editing by Shailesh Kuber
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