Chicago | Reuters — Chicago Mercantile Exchange lean hogs extended their decline to the fourth consecutive session on Friday, easing on technical selling and weaker pork prices, traders said.
The most active April hogs contract dropped to a fresh five-month low and has now declined in 12 out of the past 14 sessions. The contract settled down 1.175 cents at 58.425 cents/lb. (all figures US$).
“The (trading) volume is not that big, it’s just trend followers. It’s a snowball rolling down a hill,” Archer Financial Services broker Dennis Smith said of the declines.
Wholesale pork prices have also traded at the lowest levels since August, suggesting there was too much supply and not enough demand. The U.S. Department of Agriculture said the pork cutout was down 44 cents, to $65.17/cwt, and values for cuts such as hams, pork bellies and loins each fell.
Smith said buyers such as importers in China likely will take advantage of the low meat prices. Hog farmers in China have culled herds due to the African swine fever virus and buyers in China may need to tap overseas markets soon.
“I’m looking for a big surge in pork business … There’s no reason to wait to start booking (meat orders),” he said.
Beef prices have been comparatively stronger recently, bolstered in part by a record pace of exports late last year.
Choice-grade beef was down 86 cents, to $216.71/cwt, but values still were hovering near a roughly two-month high notched last week.
Robust beef demand has underpinned cattle futures, even as traders waited for deals to develop in U.S. cash cattle markets.
CME April live cattle finished up 1.1 cents at 127.925 cents/lb. while March feeder cattle were up 0.85 cent at 144.1 cents.
Packers in parts of the southern Plains raised bids to buy cattle to about $125/cwt late on Friday but feedlots were holding out for even higher prices. Cash cattle last week fetched mostly $124/cwt, according to USDA.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.