U.S. livestock: CME lean hogs fall on anticipated larger supplies

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Chicago | Reuters – Chicago Mercantile Exchange lean hog futures slipped on Thursday as traders look ahead to increased supplies of hogs heading into the fall and producers hedge against the possibility of future price declines, traders said.

CME August lean hog futures closed unchanged at 109.475 cents per pound, while benchmark October hogs lost 3.000 cents to 87.125 cents per pound, a 3.3 percent fall, its biggest loss since June 17.

“There’s growing concern about what happens to pork prices, as supplies start to ramp up,” said Altin Kalo, economist at Steiner Consulting Group.

With the discovery of African swine fever last week in the Dominican Republic, Kalo said producers could be preparing for the possibility of lower prices in the future.

“I suspect that probably has some producers a little more defensive, trying to put some hedges on. There may be some producer selling due to that,” he said.

The CME’s lean hog index, a two-day weighted average of cash prices, climbed slightly to $111.78 per hundredweight (cwt).

Pork export sales of 38,800 tonnes for the week ended July 29, primarily to China, were up a point from the week prior and 32 percent higher than the previous 4-week average, according to the U.S. Department of Agriculture.

Live cattle futures also slipped today, despite climbing beef cutout and tighter supply.

“This cattle market is still not reflecting what’s happening with the beef market,” said Kalo. “There’s very strong demand, not a lot of product around.”

Wholesale beef prices climbed, with Choice cuts gaining $3.24 to $292.58 per cwt, while select cuts firmed $2.62 to $273.77 per cwt, according to the U.S. Department of Agriculture.

Benchmark CME October live cattle futures eased 1.400 cent to 127.575 cents per pound. CME September feeder cattle futures lost 1.725 cent to settle at 161.150 cents per pound.

Cash trade firmed in the Southern U.S. Plains to $121-$122 per cwt. on moderate demand, the USDA said. Cash in the north was steady at $125 per cwt.

The U.S. Department of Agriculture said on Thursday it will begin releasing two new reports on cattle sales next week, aimed at providing more clarity into formula pricing agreements, which have increasingly replaced the cash cattle market in recent years, raising concerns about possible anti-competitive behavior in the market.

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