Chicago | Reuters — Chicago Mercantile Exchange lean hog futures jumped on Monday as the U.S. Department of Agriculture reduced its domestic pork production estimates for this year and next year.
The USDA cut its production estimates because of reduced expectations for commercial hog slaughtering in the second half of the year, according to a monthly supply and demand report. The country is now expected to produce 28.12 billion pounds of pork in 2022, down 1.5% from USDA’s forecast in June.
Pork import and export forecasts for 2021 and 2022 were left unchanged.
However, a separate USDA report on Friday showed strong demand for U.S. pork from buyers in China, the world’s biggest pork consumer. U.S. pork export sales to China in the week ended July 1 were 16,299 tonnes, the highest since March, according to government data.
“That was very encouraging,” said Arlan Suderman, chief commodities economist for broker StoneX.
CME lean hog futures for August delivery ended 2.5 cents stronger at 104.075 cents/lb. and touched their highest price since July 1 (all figures US$).
The supply of U.S. hogs to be slaughtered into pork has tightened after some farmers euthanized animals last year when COVID-19 outbreaks temporarily closed meat plants, removing markets for livestock. This year, the hog disease porcine reproductive and respiratory syndrome (PRRS) hurt herds.
In Monday’s report, USDA said data on hog supplies last month “indicated producers expect to farrow fewer sows in the second half of 2021 which, when coupled with slower forecast growth in pigs per litter, will tighten supplies of market-ready hogs in 2022 relative to last month.”
In the beef market, feeder cattle futures dropped as costs increased for grain used for livestock feed, analysts said.
CME August feeder cattle closed down 1.025 cents at 158.15 cents/lb. August live cattle futures ended up 0.6 cent at 119.825 cents/lb.
— Reporting for Reuters by Tom Polansek in Chicago.