Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures closed lower on Monday for a third straight session as plentiful U.S. hog and pork supplies continued to weigh on the market, analysts said.
CME’s most-active August lean hogs contract ended down 0.975 cent at 76.075 cents/lb. after dipping to 75.575 cents, its lowest level since June 27 (all figures US$). Front-month July fell 2.05 cents to settle at 70.075 cents.
“The market is getting overwhelmed with the large supplies. The cash (hog market) is under pressure; the demand is not strong enough,” said Don Roose, president of Iowa-based U.S. Commodities.
Live cattle futures also declined, retreating after Friday’s strong close, which traders had attributed to higher-than-expected cash cattle trades in northern states including Nebraska and Iowa.
“Last week we had some late trades in Nebraska at $114 (per cwt), a bit surprising — although the south was basically $109 (per cwt),” Roose said.
“It’s a market that is struggling with supplies of protein that are just large, and consumption domestically is not large enough to absorb it, yet,” Roose said.
CME benchmark August live cattle futures settled down 0.85 cent at 106.15 cents/lb. and October ended down 0.675 cent at 107.4 cents.
CME August feeder cattle futures rose 0.075 cent at 138.9 cents/lb.
Weekly commitments data released by the U.S. Commodity Futures Trading Commission after Monday’s close reflected the degree to which commodity funds have been liquidating long positions in both live cattle and lean hog futures.
The CFTC’s report showed managed funds cut their net long position in CBOT lean hog futures by 2,300 contracts in the week ended July 2, to 24,165 lots — the smallest net long since late March.
The report showed managed funds pared their net long position in CME live cattle futures for a 10th straight week, shaving 6,613 contracts in the week ended July 2, for a net long of 20,911 lots, the smallest since June 2018.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.