U.S. hog futures closed mostly lower on Friday as traders liquidated positions ahead of a major USDA hogs report, that was released after the market closed.
Trading was light much of the session in both hogs and cattle as traders awaited the USDA hog report data.
"We have no conviction right now and those pits are pretty thin," one trader said. "There is no leadership, no strong feeling."
After the close, USDA reported the March 1 hog herd at 97 percent of a year ago, the breeding herd at 97 percent and the market hog supply at 97 percent. Those numbers matched or were very close to average trade estimates. Href="NewsSearchID">ID:nN25407383
April hogs Href="QuoteRef">2LHJ9 closed off 0.050 cent at 60.475 cents per lb and June Href="QuoteRef">2LHM9 was off 0.375 at 71.400 cents.
Because U.S. traders expected a smaller hog herd, much of the Friday’s USDA hog data may have already been priced into the futures, evidenced by contracts being at a large premium to current cash hog prices.
Steady to higher cash hog markets and outlook for tighter hog supplies ahead supported hog futures early.
Live cattle futures traders focused their attention on a snow storm in the southern Plains. They had little interest in taking positions until the cash cattle market was established or until they found out what the Hogs and Pigs report said.
At least five U.S. beef plants were closed on Friday and others cut production due to the storm. The storm, which had blizzard conditions, may leave eight to 18 inches (20-46 cm) of snow in western Kansas, western Oklahoma, and the Texas panhandle.
April live cattle Href="QuoteRef">2LCJ9 ended up 0.050 cent at 84.325 cents per lb and June Href="QuoteRef">2LCM9 was off 0.275 at 81.575 cents.
Some short covering was evident in live cattle at times after losses early in the week. But a continued weak wholesale beef market continues to show slower-than-expected demand and that is keeping a lid on futures.
With select cut values rising over the normally higher-priced choice cuts it shows that consumers are switching to lower priced beef items.
Lack of cash cattle trade so far this week limited interest in trading futures. Some traders thought the snowstorm would cause packers to pay up for cattle while others pointed to the weak beef market and negative packer margins for keeping cash cattle prices no better than steady.
In feeder cattle futures, floods in the northern plains effected futures as that could keep higher priced feeders from being marketed there. That could pressure the CME feeder cattle index price, which is based on a seven-day average.
"Take out the north and the index should lose some value," one trader said.