Chicago | Reuters — Chicago Mercantile Exchange lean hog futures fell on Wednesday on technical selling and fears that falling Chinese hog prices point to slowing export demand for U.S. pork, traders said.
CME December lean hog futures settled down 1.375 cents at 76.025 cents/lb., after dipping to 75.925 cents and filling a gap on the contract’s chart from Sept. 24 (all figures US$). CME February hogs ended down 1.225 cents at 79.225 cents/lb.
Hog futures have slumped this month after spiking in late September due to the U.S. Department of Agriculture’s quarterly hog report on Sept. 24 that indicated a smaller-than-expected U.S. supply.
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Traders’ focus has since shifted to demand, and worries that China’s resurgent hog herd will curb U.S. pork exports.
China became the top buyer of U.S. pork in 2020 after the Asian country’s massive hog herd was decimated by African swine fever. But recent data showed China posted its highest third-quarter pork output in three years as producers built thousands of large breeding farms last year.
“The concern is China’s hog prices are down 60 per cent this year. Does that mean the same for us?” said Don Roose, president of Iowa-based U.S. Commodities.
China’s pig prices may continue to fall after the Lunar New Year next year if production is not substantially reduced, an official at China’s agriculture ministry said.
In the cattle markets, CME live cattle futures closed higher on expectations for steady or firmer cash trades this week.
CME December live cattle futures settled up 0.5 cent at 130.525 cents/lb. but stayed below chart resistance at its 50-day moving average near 131 cents. January feeder cattle futures rose 1.25 cents to end at 160.475 cents/lb.
Traders await monthly U.S. cattle-on-feed and cold storage reports due from USDA on Friday.
Analysts surveyed by Reuters on average expect the government to report the number of U.S. cattle on feed as of Oct. 1 at 99.4 per cent of the year-ago figure. Cattle placements in September were seen at 101.4 per cent of year-ago, while September cattle marketings were seen at 97.5 per cent of year-ago.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
