Cattle and hog prices moved lower Thursday on continued profit-taking.
April, the front-month hog contract at the Chicago Mercantile Exchange, settled down 1.22 cents a pound, or 1.30%, at 92.75 cents. Most-actively traded June was down 1.40 cents, or 1.38%, at $1.0010 a pound.
News at mid-morning of a magnitude 7.1 earthquake in Japan added to the selling interest at the time as traders fretted about the effect on the U.S. export markets for pork and beef. Cattle and hog markets have grown dependent on exports, and the potential for cuts in product demand undercut futures prices.
Subsequent reports that the quake did little extra damage after March's 9.0 magnitude quake and tsunami did not provide a bounce to recover the day's losses.
Lean hog futures ended at a one-week low because of the profit-taking. The selling was sparked by fears of a decline in pork demand at near-record-high prices. Investors banked profits just in case pork demand would decline.
"Traders haven't taken enough profits out of the market yet, either. A $100 price for hogs is pretty stout, and it's not even the summer grilling season," said Rich Nelson, director of research at Allendale Inc.
Concerns about the sustainability of current pork and hog prices brought in the profit taking early in the session, taking prices below key chart support areas. Prices remained weak and settled below support at this week's low through Wednesday and below the rising 10-day moving average.
The close below these key areas pointed to continued price weakness in the near term.
"It's going to be difficult for technicians [traders who base most or all of their trading decisions on chart movements and patterns] to buy this, in my view, unless we see a complete reversal higher soon," said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
Retail grocers this week are featuring chicken and not beef and pork. Nelson said wholesale chicken breast prices are 14% lower than they were a year ago while pork is up 24% and beef is up 16% to 17%. At these differences, it is hard to make a case that beef or pork should be featured ahead of chicken.
Cash hogs were flat to lower, although there were instances where volumes were light and prices were higher.
Wholesale pork prices were lower Thursday, adding to the concerns that the latest price gains could be sustained, Nelson said.