Chicago | Reuters — U.S. hog futures touched a two-month high on Monday on technical buying and hopes for more export sales to China, brokers said.
Traders are waiting for confirmation of Chinese buying as the Asian nation is struggling with an outbreak of African swine fever, a fatal pig disease that has decimated its herd over the past year. The disease has also spread to Vietnam, South Korea and other countries.
China’s supermarkets are topping up their meat counters with frozen pork from state reserves, after prices of the nation’s favourite protein source surged to budget-busting levels, threatening to mar this week’s National Day festivities.
“There were more people buying (futures) in case of that Chinese buying or Asian buying,” said Don Roose, president of Iowa-based broker U.S. Commodities.
December lean hog futures soared 2.75 cents to 72.6 cents/lb. at the Chicago Mercantile Exchange (all figures US$). The contract reached its highest price since July 31 and has climbed 25 per cent since setting a one-year low on Sept. 10.
Large supplies continue to hang over the market, though.
The U.S. Department of Agriculture reported on Friday that the inventory of all hogs and pigs on Sept. 1 was 77.7 million head, up three per cent from a year earlier. That was the highest Sept. 1 inventory since USDA began keeping estimates in 1988 and exceeded analysts expectations for a 2.8 per cent increase.
In the beef market, December live cattle futures closed down 0.275 cent at 110.3 cents/lb., after reaching its highest price since Aug. 7 on Friday.
November feeder cattle futures closed down 1.05 cent at 141.925 cents/lb., after reaching its highest price since July 31 on Friday.
“The futures market just kind of stalled today,” Roose said.
A rebound in cash prices recently helped underpin futures. Cash prices are not expected to decline this week from an average price of about $105/cwt last week in a five-region area monitored by USDA, according to traders.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.