U.S. livestock: Nearby lean hog futures slide as slaughter rebounds

CME live cattle up on bargain buying

CME June 2020 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange nearby lean hog futures hit a six-week low on Wednesday as the U.S. slaughter pace continued to recover, generating pork supplies that pressured wholesale prices and packer margins, traders said.

CME June lean hogs ended down their daily limit of 3.75 cents, at 48.65 cents/lb., while most-active July futures settled down 1.4 cents at 53.475 cents after dipping to 53.35, the contract’s lowest since April 24 (all figures US$).

The U.S. hog slaughter totaled 429,000 head on Wednesday, the most since mid-April, when worker illnesses from the COVID-19 pandemic started causing numerous U.S. meat packing plants to shut down temporarily.

The U.S. pork cutout, an indication of wholesale prices, was down 27 cents at midmorning at $74.10/cwt, the U.S. Department of Agriculture said. USDA updated the cutout later on Wednesday to $75.01/cwt, a net increase of 64 cents for the day, but the value was still down from roughly $90/cwt last week.

Traders awaited USDA’s weekly export sales report on Thursday to see whether China, the world’s top pork consumer, bought much U.S. pork in the week ended May 28. Weekly U.S. pork sales to China averaged more than 23,000 tonnes from early March through April, but net sales through the first three weeks of May were a net negative 417 tonnes.

“There is not a lot of good news out there (with) these worries about export demand, and the wholesale market not holding together. And we still have a lot of hogs in the pipeline,” said Altin Kalo, agricultural economist for Steiner Consulting.

CME live cattle futures rose on bargain buying after a three-session slide. However, weaker cash cattle prices and falling wholesale beef prices hung over the market, capping rallies. Market-ready cattle traded as low as $109/cwt in the U.S. Plains on Wednesday, USDA reported, down from last week’s highest trades at $120/cwt.

CME June live cattle futures settled up 0.15 cent at 95.45 cents/lb. and benchmark August rose 1.15 cents to end at 97.35 cents.

CME August feeder cattle futures closed up 0.8 cent at 134.225 cents/lb.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.



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