Hog futures were mixed, easing after starting the week with an emphatic rally.
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October lean hog futures at the Chicago Mercantile Exchange fell 0.3% to 63.55 cents a pound on Wednesday after rising over 3% a day earlier. Analysts said the rally created upward momentum in a market that has otherwise been under pressure.
"I see the technicals point in one direction and the fundamentals point in the other direction," said Jim Burns, a broker with Rosenthal Collins Group at the Chicago Board of Trade. "Fundamentally there is a ton of supply out there, an absolute ton of supply."
At the same time, he said, Tuesday's rally pushed hog futures past their 10-day moving average and toward the 100-day marker. That added some technical support to the market. But some analysts said they saw 64 cents a pound as a technical ceiling the October contract could struggle to break through.
Cattle futures, meanwhile, rose as higher beef prices boosted the market. CME October live cattle contracts gained 0.3% to $1.047 a pound.
Wholesale beef lost around a quarter of its value from early June to late August before prices began to steady last week. Beef rose $1.10 to $192.45 per 100 pounds on Tuesday, and continued to climb on Wednesday morning.
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The uptick in beef prices is a bright spot for traders betting the cattle market is due to bottom after trending lower through much of the summer.
Analysts nevertheless said the cash market for slaughter-ready cattle was likely to continue under pressure as meatpackers worked through ample supply of cattle being fattened for slaughter. It will likely be several months before those supplies ease, according to U.S. Department of Agriculture data.
At the Fed Cattle Exchange's online cash-market auction on Wednesday morning, which typically helps set the rhythm for the week's trade, meatpackers bought 125 head from South Dakota on a dressed basis for $1.63 a pound. By contrast, last week, 1,140 cattle changed hands for $1.66 a pound dressed and $1.05 a pound live.
The combination of higher beef price and lower cash cattle costs is helping meatpackers, whose margins have expanded. Margins were at $148.60 a head on Wednesday, according to the HedgersEdge index, around double the month-ago figure.
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Corrections & Amplifications
This item was corrected at 3:12 p.m. ET to show that Jim Burns is a broker with Rosenthal Collins Group at the Chicago Board of Trade, not the CME.
"I see the technicals point in one direction and the fundamentals point in the other direction," said Jim Burns, a broker with Rosenthal Collins Group at the Chicago Board of Trade. "Hog Futures Ease; Cattle Rise After Quiet Auction," at 3:13 p.m. EDT, misstated the exchange in the third paragraph.
(END) Dow Jones Newswires
September 06, 2017 15:26 ET (19:26 GMT)