Chicago | Reuters — U.S. hog futures rose on Tuesday with support from stronger cash prices, while live cattle futures eased in a setback from recent advances.
Gains in hog futures and cash prices reflect solid domestic demand for pork and signal that pig supplies are expected to tighten heading into the new year, said Dennis Smith, commodity broker for Archer Financial Services.
Cash prices for pork carcasses, loins, butts, ribs and hams rose from Monday, according to U.S. Department of Agriculture data. The increases are impressive given that meat packers have been slaughtering massive numbers of pigs, Smith said. They slaughtered an estimated 494,000 hogs on Tuesday, up from 475,000 a year earlier.
Supplies of hogs are plentiful after farmers expanded their herds to supply new slaughterhouses that opened in recent years.
“We probably have peaked out on the hog numbers,” Smith said. “By the end of the year, the numbers are going to be a lot tighter than what they have been.”
Lean hogs for February delivery jumped 1.275 cents to 67.975 cents/lb. (all figures US$) at the Chicago Mercantile Exchange (CME).
Pork producers are now hoping for an initial deal to ease the trade war with China to increase export demand.
China imposed steep tariffs on U.S. agricultural products last year in retaliation for U.S. duties on Chinese goods during a 17-month trade war that has rattled global markets.
The tariffs have slowed U.S. shipments, but China now needs to import more meat after an outbreak of a fatal pig disease decimated its herd.
USDA, in a monthly report, lowered its pork export forecasts for 2019 and 2020 because of “slower-than-previously expected growth in exports to several markets.” The agency predicts pork production will rise about 3.6 per cent in 2020.
“We have got to really keep this export market in high gear to give a hog producer a chance to make money here,” Smith said.
USDA also lowered its estimate for 2019 beef exports. Domestic demand for beef has been strong, though.
CME February live cattle ended down 0.175 cent at 124.575 cents/lb. The market has pulled back slightly since reaching a contract high of 127.15 on Nov. 29.
January feeder cattle futures rose 0.125 cent to 141.65 cents/lb. and reached their highest price since Dec. 4.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.