U.S. livestock: CME hog futures fall as pork demand softens

CME cattle down despite firmer cash trade

CME October 2021 lean hogs (candlesticks) with Bollinger bands (20,2) and CME lean hog cash index (blue line, left column). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange hog futures fell for the sixth consecutive day on Friday, pressured by lower pork demand coinciding with larger hog supplies, analysts said.

The hog market also felt the effects of investment funds liquidating long positions, traders said.

“We saw a fair amount of weakness. This market has been fretting post-Labour Day business for some time,” said Altin Kalo, economist with Steiner Consulting Group.

CME October lean hog futures dropped 3.025 cents to close at 82.45 cents/lb., its lowest since June 24 (all figures US$).

Pork cutout fell $3.60, to $105.10 per hundredweight (cwt), according to the U.S. Department of Agriculture.

The CME’s lean hog index, a two-day weighted average of cash hog prices, fell to $97.96, its lowest since March 26, 2021.

Weekly exports improved, USDA said, with exporters selling 33,800 tonnes of pork for the week ended Sept. 2, primarily to China, marking a 47 per cent increase compared to the four-week average.

But export sales remain inconsistent, Kalo said.

“Seasonally, you go into the time of year where hog supplies will increase. You have any sort of hiccups with exports, that’s going to be a challenge,” he said.

Meanwhile cattle futures fell, despite firmer cash trade in the Southern U.S., as beef prices continue to decline.

CME December live cattle lost 0.575 cent to close at 128.225 cents/lb., while October feeder cattle fell 1.525 cents, to 157.725 cents/lb., touching its lowest since June 14.

“On cattle, the expectation is, the feedlots will become incrementally more current, and that will allow them to narrow that spread between the cutout and cattle themselves,” said Kalo.

Cash cattle prices in Texas and Oklahoma climbed to $123-$124, while Nebraska cattle found $124-125 cash trade.

Choice cuts of boxed beef fell $3.13, at $329.45/cwt, while select cuts dropped 92 cents to $295.53/cwt, USDA said.

Exporters sold 12,400 tonnes of beef last week, a 20 per cent drop from the week prior and two per cent lower than the previous four-week average, USDA said.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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