U.S. lean hog futures prices closed mostly lower Tuesday after sliding from the session's highs on profit-taking and spillover pressure from sharp declines in corn and cattle futures.
April, the front month and most-actively traded hog contract at the Chicago Mercantile Exchange, closed unchanged at 92.27 cents a pound. June, the next-most actively traded contract, fell 0.37 cent, or nearly 0.4%, to close at $1.0240 a pound. June had earlier hit a new life-of-contract high at $1.0410.
At the outset, futures climbed sharply on investor buying and support from three-consecutive days of higher wholesale pork prices. The tenure of the run-up was brief, however, as declines in most other agricultural commodity sectors eventually weighed on lean hogs.
The early advances were overly exuberant, said an independent hog trader. Some brokers and other traders said the early gains were unjustified given the wide premiums already held in futures over the current cash prices.
Another trader said the market "became top-heavy and due for a downward correction" after the latest surge in which July and August tapped new highs in either Globex or pit trading. The breaks in corn and cattle futures served as catalysts to the backslide in lean hogs, he said.
At its close, April held a premium of 9.03 cents to the latest CME two-day cash index.
Cash prices were mostly flat with a few processing plants quoting firmer bids for additional loads to arrive later in the week or early next week. according to livestock dealers and market managers. Premiums held in futures to the cash quotes are encouraging producers to ask higher prices for their animals. Expectations for pork sales to improve in March and for wholesale prices to begin a seasonal uptrend also contributed to producers' optimism that hog prices should move higher as well.