Hog futures tumbled off their perch on Thursday as traders locked in profits on a recent rally.
Lean hog contracts at the Chicago Mercantile Exchange climbed around 45% from late April to early July, marking a 2 1/2-year high, on the back of everything from a supply pinch to strong demand for pork bellies.
But analysts said wavering wholesale pork prices this week prompted some traders to roll out of their optimistic bets, in case futures peak.
"The hog market continues to probe for a short-term, seasonal top, but it will have a difficult time moving lower without a decisive turn lower in pork cutout values," said the Hightower Report in a note to clients.
Wholesale pork prices were higher at midday, rising to $1.04 a pound, after dipping on Wednesday. Much of the recent premium is due to tight stocks of bellies on the back of consumer appetite for bacon. That pushed the cost of bellies near $2.02 a pound on Thursday morning.
CME July lean hog futures fell 0.6% to 91.475 cents a pound. The inability to break through recent highs spurred selling interest, according to Brian Hoops, president of brokerage Midwest Market Solutions.
Cattle futures, meanwhile, did a U-turn, closing higher after dropping at the opening. Steady cash market prices, bucking a recent downward trend, created buying interest in futures, analysts said.
The U.S. Department of Agriculture said beefpackers bought cattle for $1.18 a pound live and $1.88 a pound dressed in northern states, along with $1.17 a pound live in Kansas. Cash market activity in some regions was slow as feedyards continued to pass up packer bids, the agency said.
CME August live cattle futures rose 1.2% to $1.1495 a pound. August feeder cattle futures rose 1.7% to $1.44625 a pound. Lower corn futures, which reduces the cost of fattening cattle, also helped the market.
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(END) Dow Jones Newswires
July 06, 2017 15:15 ET (19:15 GMT)