CME Livestock: Hog futures surge on bullish USDA data

Chicago Mercantile Exchange (CME) lean hog futures soared on Monday

The most-active December contract rose its daily limit after a quarterly U.S. Department of Agriculture report showed a smaller-than-expected U.S. hog herd.

CME October lean hogs LHV1 settled up 2.975 cents at 90.250 cents per lb, and the December contract LHZ1 rose its daily maximum of 4.750 cents to finish at 81.550 cents per lb. Limits will expand to 7 cents for Tuesday’s session, the exchange said.

“That tells you hog supplies are going to stay tight into the end of the year“

 

Hog futures roared higher after the USDA late Friday said the U.S. Sept. 1 hog inventory was down 4% from a year ago and the number of hogs kept for breeding was down 2%, both below trade expectations.

In particular, analysts noted that the June-to-August pig crop was down 6% from last summer.

“That tells you (hog) supplies are going to stay tight into the end of the year. The first time you have a chance to build supplies back is next summer,” said Don Roose, president of Iowa-based U.S. Commodities.

Higher wholesale pork prices and a significant discount of futures to cash hog prices lent support. The pork carcass cutout was up $1.18 on Monday at $111.95 per cwt, the highest since Aug. 27, according to the USDA.

On the cattle side, futures fell after the USDA’s monthly cattle-on-feed report, also released on Friday, showed Sept. 1 on-feed supplies and August placements above trade estimates.

October live cattle LCV1 settled down 0.525 cent on Monday at 122.400 cents per lb and benchmark December LCZ1 fell 0.350 cent to end at 127.8 cents.

November feeder cattle futures FCX1 tumbled 3 cents to settle at 155.575 cents per lb.