Chicago | Reuters — U.S. hog futures closed mostly lower on Tuesday on concerns about a heavy slaughter pace coupled with uncertainty about export demand from China, the world’s biggest pork consumer, traders said.
The weak tone underscored fears that the coronavirus outbreak in China could reduce export demand for pork at a time of plentiful U.S. hog supplies.
“We’ve got (an) oversupply that we have to contend with,” said Brian Hoops, president of Midwest Market Solutions.
Tuesday’s U.S. hog slaughter was estimated at 496,000 head, up from 474,000 head a year ago, the U.S. Department of Agriculture (USDA) said.
The benchmark April lean hog futures contract on the Chicago Mercantile Exchange settled down 0.4 cent at 62.325 cents/lb., just above the latest lean hog index of 61.41 cents (all figures US$). CME June hogs fell 0.375 cent to end at 77.9 cents.
“There is a fairly rich premium for May (futures) through the summer months, compared to the current index. That is not necessarily bullish, especially with what is going on with the coronavirus in China,” Hoops said.
Front-month February hogs bucked the weak trend, settling up 0.45 cent at 56.75 cents.
U.S. live cattle futures drifted lower as brokers awaited direction from the cash cattle trade that usually occurs in the last half of the week.
CME April live cattle futures settled down 0.075 cent at 120.65 cents/lb., retreating after notching a one-week high at 121.8 cents. Front-month February futures were down 0.05 cent at 121.625 cents.
“People just don’t really have a good conviction of what they want to do here,” one trader said.
The wholesale choice boxed beef cutout value fell 63 cents to $210.93/cwt on Tuesday while select cuts were up nine cents at $207.51/cwt, USDA said.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.