Chicago | Reuters — Chicago Mercantile Exchange lean hog futures tumbled by the daily trading limit on Friday under pressure from stronger-than-expected productivity in U.S. herds, analysts said.
The U.S. Department of Agriculture, in a quarterly report issued after trading ended on Thursday, surprised analysts by reporting the average pigs saved per litter reached 11.61 for the June-August period, up about 4.3 per cent from a year earlier. That was above the highest estimate from analysts surveyed by Reuters, who on average expected a two per cent increase.
Read Also
U.S. grains: Wheat futures rise on supply snags in top-exporter Russia
U.S. wheat futures closed higher on Thursday on concerns over the limited availability of supplies for export in Russia, analysts said.
Traders reviewed the data and overall herd size as low pig prices and high operational costs have made it unprofitable for producers to raise hogs.
Overall, the inventory of all U.S. hogs and pigs on Sept. 1 was up 0.3 per cent from a year earlier at 74.3 million head, while analysts expected a decline of 0.8 per cent.
“We have seen the shrinkage in the breeding herd because of the poor margins. Because of the greater pigs per litter, we’re offsetting that,” said Arlan Suderman, chief commodities economist for broker StoneX.
Most-active CME December lean hogs sank 3.75 cents to finish at 71.775 cents/lb. (all figures US$). On Monday, the daily limit will temporarily expand to 5.5 cents.
Some general selling in commodities markets weighed on livestock futures, traders said. Oil prices settled one per cent lower.
Economic concerns also loomed, traders said, ahead of an expected U.S. government shutdown and as the United Auto Workers expanded their strike.
U.S. consumer confidence in September dropped to a four-month low, weighed down by persistent worries about higher prices and rising fears of a recession.
“When you get that kind of consumer uncertainty, they tend to be less willing to pay up for the more expensive cuts of meat,” Suderman said.
In CME’s cattle markets, most-active November feeders ended down 2.775 cents at 254.9 cents/lb. Most-active December live cattle dropped 2.5 cents, to 187.925 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
