Hog Futures Drop On Weak Pork Prices

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U.S. lean hog futures fell to the lowest levels since mid-August on Wednesday, declining for the second straight session as weaker prices for pork pointed to abundant supplies, traders and analysts said

by Michael Hirtzer – Reuters

Cattle futures also eased on the Chicago Mercantile Exchange but prices stayed within recent trading ranges as investors waited for deals to develop in cash cattle markets.

“Certainly, a lot of the enthusiasm we had in some of these markets has disappeared,” said Steiner Consulting Group analyst Altin Kalo.

CME April lean hog futures fell 0.7 cent, to 60.9 cents/lb., near their session bottom of 60.8 cents that was the lowest point for the contract since Aug. 15.


“Weak pork prices forced some meat packers to cut bids to buy hogs in the U.S. Midwest”


 

The U.S. Department of Agriculture pegged wholesale pork prices at $65.61/cwt, down 61 cents and also the lowest since August. Prices for cuts such as hams have fallen sharply in recent days, weighing down the pork cutout comprised of several cuts from hams to loins to pork bellies.

“There’s way too much pork in the market,” Kalo added. “We are producing record supplies for this time of year.”

Some traders were betting on increased U.S. pork exports to China as the African swine fever virus forced Chinese hog farmers to cull herds in the world’s biggest pork market. But that demand may not show up until later this year.

Weak pork prices forced some meat packers to cut bids to buy hogs in the U.S. Midwest, further weighing on futures.

USDA pegged average cash hog prices in the top Iowa and southern Minnesota market at $49.52/cwt, down 51 cents.

There were few deals in U.S. cash cattle markets so far this week. The CME Group posted 25 deliveries against CME February cattle futures — notices that suggested delivering against futures might be more advantageous than waiting for better prices in the cash market.

At the weekly Fed Cattle Exchange online auction, 161 cattle sold out of 294 head offered at an average price of $124.11/cwt, according to the auction website. That price was on par with cash cattle deals last week in the U.S. Plains.

CME April live cattle edged down 0.475 cent, to 127.15 cents/lb., while CME March feeder cattle futures shed 0.65 cent, to 143.175 cents.


Michael Hirtzer reports on commodity markets for Reuters from Chicago.

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