KANSAS CITY (Dow Jones)--Chicago Mercantile Exchange lean hog futures fell Thursday, pressured by profit-taking, or selling of contracts previously purchased, and further weakness in the cash hog markets.
Concerns about possible continuation of steep declines in wholesale pork prices the past two days weighed on hog futures as well. In addition, some pressure was exerted from fund selling and lower stock prices on Wall Street.
Most of the actively traded contracts held within Wednesday's wide range.
Wednesday's $1.76 per hundredweight decline in wholesale pork prices crimped pork packers' margins and undermined lean hog futures prices at the start.
Selling in front-month October and most-active December accelerated after both contracts triggered sell stops, especially after October opened below 20-day moving average support.
Declines in U.S. stock prices and the U.S. dollar's rise against some foreign currencies pressured deferred hog contracts.
Market participants traded less aggressively ahead of the U.S. Department of Agriculture quarterly hog report Friday at 3 p.m. EDT (1900 GMT). Following are the averages of analysts' estimates and the ranges for the top three categories:
All hogs and pigs on Sept 1 98.2 97.4-99.0
Kept for breeding 97.4 96.5-98.2
Kept for marketing 98.3 97.3-99.1
Flat to weak cash hog bids are expected for Friday as packers sort through ample supplies. Futures traders on Friday are expected to settle their accounts before the weekend and in preparation for Friday afternoon's hog numbers.
October hogs ended 70 points lower at 50.22 cents a pound. December closed 70 points lower as well at 49.35 cents.
February pork bellies closed 15 points lower at 80.02 cents a pound on chart-related selling, spillover pressure from lean hogs, and caution before Friday's quarterly hog report.
CME live cattle Thursday closed weak on profit-taking after Wednesday's sharp gains, uneasiness about this week's potential cash cattle price outcome and pressure from outside markets.
Although bullish traders remained confident that reduced cattle numbers would yield at least steady cash prices in the Plains this week, this optimism was tempered by uninspiring boxed beef prices at midday and tightening beef packer profit margins.
A few thousand head cash-basis cattle in Nebraska moved at $83 per hundredweight on a live basis versus $84 to mostly $84.50 last week. Dressed-basis sales were reported at $129 to $130. Fed cattle bids elsewhere are reported $82 to $83 against $86 asking prices.
The USDA's midday Thursday boxed beef data showed choice cuts up 7 cents per hundredweight, but select items dropped 53 cents.
October and December contracts also tripped prearranged selling points that added pressure to prices, traders said.
U.S. stock markets sold lower when prices failed to hold early morning gains, a broker said. And when stocks began to sell, they sold off aggressively, leading to a contagion that spread to other markets, including cattle, he said.
The mildly firmer U.S. dollar was considered bearish to many commodity markets because it had been expected to decline a bit, a broker said. Short covering came into this market, and the effects were felt everywhere, he said.
Grain markets were firmer amid widespread unwinding of cross-market trading plays, a broker said. Some large firms bought wheat and sold corn while other investors took the other side and even pushed corn higher to support their own spread investments.
Those higher feed prices tended to pressure feeder cattle and live cattle markets.
October live cattle ended 35 points lower at 86.1 cents a pound, and December ended 47 points lower at 85.27 cents.
September CME feeder cattle finished up slightly as it tracked the exchange's feeder cattle index before expiring at 1300 EDT. Remaining feeder contracts closed lower, however, on profit-taking, sell stops and live cattle's declines.
September feeders settled up 15 points at 97 cents. October, the new spot month, closed 75 points lower at 97.12 cents, and November ended 67 points lower at 97.27 cents.
Cattle traders Friday are expected to await the results of this week's cash trade and square positions before the weekend. Cattle traders who also dabble in hogs will also monitor lean hogs' movement heading into Friday's quarterly hogs and pigs report.
-By Curt Thacker and Lester Aldrich, Dow Jones Newswires; 913-322-5178; firstname.lastname@example.org