U.S. lean hog futures prices closed mostly lower Thursday on profit taking and after some traders grew cautious about the near-term outlook for pork prices after five consecutive days higher.
April, the front month and most-actively traded hog contract at the Chicago Mercantile Exchange, closed down 1.47 cents, or 1.6%, at 89.50 cents a pound. April hit a four-week low. June, the next-most-actively traded contract hit nearly a three-week low and closed down 1.17 cents, or nearly 1.2%, at $1.0052 a pound.
In addition, some outside investors exited from long positions as they moved money out of hogs and certain other agricultural commodities and funneled it into the energy or financial markets, brokers said. The selling weighed on prices shortly after hog futures posted early gains and the nearby months drew near Tuesday's lows. Further pressure on prices occurred when the market fell through previously placed sell orders.
Speculation among some traders earlier in the day that wholesale pork prices might continue to move higher gave way to a more flat outlook in the near term, said Tom Cawthorne, vice president and hog futures trader for R.J. O'Brien.
The selloff also triggered additional hedge selling in the spring and summer months as traders sought to preserve the majority of the recent gains, a broker said. June's close was its lowest since Feb. 2 and represented a 3.4% decline from its contract high hit Tuesday.
In the cash markets, pork processors were paying flat to firmer prices for additional hogs to fill their slaughter schedules for early next week. A seasonal reduction in supplies is expected to gradually trim the number of animals ready for marketing from late winter into the summer.
-By Curt Thacker, Dow Jones Newswires; 913-322-5178; firstname.lastname@example.org
SUBSCRIBERS: New US Livestock Market Review To Launch
A new daily pan-market comment will provide reporting and analysis on developments in livestock markets. Publication will begin on March 7.
"US Livestock Review" will recap the trading day in cattle and hog futures at the Chicago Mercantile Exchange and cash deals for cattle and hogs in regional U.S. markets.
Every trading day, "US Livestock Review" will be published shortly after the close of trading at the Chicago Mercantile Exchange. It will include settlement prices for live and feeder cattle futures and hog futures.
As a result of this change, an updated version of "US Cattle" and "US Hogs" will no longer be published at the end of the trading day. Relevant codes will migrate to the new market comment.