DJ CME Livestock Review: Hogs Again Clock Multi-Month Highs

February pork bellies, the only contract that traded, and live cattle posted mild gains. Feeder cattle finished narrowly mixed.

Lean hogs gapped higher at first, fueled by more buying leftover from futures' rise Tuesday. That evening's considerable pork cutout price increase was impressive because grocers normally scale down meat purchase before holidays.

A few traders cited diminished hog weights as a contributor to Wednesday's bullish futures mood. It suggests that some hog producers are current in marketing their animals.

Also, steady-to-higher cash hog prices emboldened market bulls. They were also enamored with the U.S. dollar's sharp drop and Chicago Board of Trade corn's steep climb.

Spreading was the most popular trade of the session. Traders bought February and April and sold December. Some in the pit also implemented February/April bulls spreads.

Cash hog bids are called steady-to-firm for Friday.

Processors may keep pace with this week's surprisingly strong fresh pork buying pace. Packers also want to make sure they have enough hogs to accommodate Saturday's estimated 350,000-head slaughter.

Consistent recent lean hogs gains pushed December and February deeper into technically overbought territory. That may be a bearish factor for futures Friday when traders return from Thursday's Thanksgiving Day holiday.

Market participants Friday are also expected to square positions before the weekend and as Monday, the last trading day of the month, approaches.

CME livestock markets Friday will close at 1 p.m. EST (1800 GMT), an hour early, in observance of the Thanksgiving holiday.

December hogs ended 80 points higher at 59.42 cents a pound, and February finished 165 points higher at 67.65 cents.

February pork bellies ended up 30 points at 86.97 cents on lean hogs' upswing, buy stops and steady midday fresh belly prices.

Also, February bellies earlier cracked 10- and-20-day moving average resistance barriers.

Other belly months were unquoted.

Cattle Complex

Live cattle closed firm on better-than-anticipated cash cattle prices so far this week, brisk pre-holiday beef sales and high-priced CBOT corn.

Cattle contracts rose at the start, awakened by a trickle of fed cattle prices that bested last week's disappointing cash results.

Cash-basis cattle transactions in Kansas was thought to be done for the week at mostly $83 per hundredweight, although only 22,000 head changed hands. Texas/Oklahoma fed cattle brought $84, but feeders there are holding out for more money. The bulk of cash cattle last week moved at mostly $83.

Some processors may have paid more for supplies due in part to robust wholesale beef movement at a time when hams and poultry dominate conversations at grocers' meat counters.

The U.S. Department of Agriculture's midday Wednesday boxed beef data quoted choice cuts up $1.14 per hundredweight, and select items rose $0.76.

Packers also had the financial wherewithal to pay up for cattle, something that feeders hope will work in their favor as the cash sector looks to cleanup remaining fed cattle this week.

The latest operating margin index for beef packers was plus $30.25 per head, compared with plus $20.85 the previous day.

Floor traders returning from holiday Friday will possibly look to settle their business affairs before the weekend and in advance of November's final day of trading.

December live cattle closed up 27 points at 83.67 cents a pound, and February finished up 25 points at 85.75 cents.

Feeder cattle closed narrowly mixed.

Spot-January garnered underlying support because of its close proximity to CME's feeder cattle index and modest live cattle backing. Profit-taking, CME's corn's steep run-up and premiums to the exchange's feeder cattle index weighed on March.

January feeder cattle ended up 7 points at 93.30 cents, and March closed down 2 points at 94.27 cents.

-By Theopolis Waters; Dow Jones Newswires; 312-559-4965; theopolis.waters@dowjones.com

(END) Dow Jones Newswires

11-25-09 1557ET

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