Chicago Mercantile Exchange lean hog futures fell nearly 2 percent on Thursday on technical selling and a weak cash hog market, traders said.
The front-month May contract was pulled lower by its large premium to cash hog prices, which have been largely anchored by abundant supplies.
Meanwhile, wholesale pork prices struggled to rally as chilly weather has delayed the traditional start of the outdoor grilling season in much of the country.
“The cash market looked to have topped last week and the carcass (pork price) has not done a whole lot to encourage friendliness,” said analyst Craig VanDyke of Top Third Ag Marketing.
CME May hog futures closed 1.225 cents per pound lower at 67.325 cents. Actively traded June futures fell 1.350 cents to 74.000 cents per pound, a 2-1/2 week low.
The U.S. Department of Agriculture pegged the wholesale pork cutout value on Thursday at $67.85 per cwt, down 64 cents on the day. Average cash hog prices in the closely followed Iowa and southern Minnesota market eased slightly to $58.32 per cwt, the USDA said.
Average pork packer margins have narrowed to $13.25 per head, down from $21.55 a week ago, according to livestock marketing advisory service HedgersEdge.com LLC.
Nearby live cattle futures posted modest gains on Thursday as firm cash cattle prices underpinned the market. Deferred futures were dragged lower by fund selling and pressure from an abundant supply of market-ready cattle expected in the coming weeks.
CME April live cattle closed 0.600 cent per pound higher at 122.525 cents while June futures dropped 1.225 cents to 104.350 cents per pound, widening an historically large spread between the two contracts. August futures fell 1.250 cents to 104.025 cents per pound.
Some cash cattle have traded at U.S. Plains feedlot markets at prices as high as $121 per cwt this week, but the bulk of animals on offer remain unsold, traders said. Strong cash beef prices and robust packer margins are expected to trigger higher cash cattle prices when trading resumes on Friday, they said.
The choice boxed beef cutout value gained another $1.55 on Thursday to $220.08 per cwt, up $8.74 from a week ago, according to USDA. Average packer margins expanded to $83.10 per head, up $24.80 from a week earlier.
Feeder cattle futures mirrored declines in live cattle, with spot April up 0.325 cent per pound at 140.175 cents and May down 1.050 cents at 140.300 cents.