Chicago | Reuters – Chicago Mercantile Exchange lean hog futures fell sharply on Tuesday, weighed down by ample supplies and tumbling prices for pork bellies that are used for bacon, traders said.
Front-month August lean hogs fell 2.175 cents to 61.125 cents per pound, dropping to a life-of-contract low for the fourth consecutive session.
Most-active October hogs also hit a lifetime low, finishing down 0.500 cent at 50.725.
Declines in hog futures came despite a media report that the United States and China were holding new talks in efforts to avoid escalations in the trade war that resulted on tariffs on shipments of U.S. pork, soybeans and other goods into China.
Soybean futures surged over 3 percent on optimism of the talks, traders said.
China has not bought significant amounts of U.S. pork this year but any additional demand could help alleviate pressure from abundant supplies of U.S. pork and hogs, traders said.
U.S. Department of Agriculture showed prices for U.S. pork bellies and other pork cuts were sharply lower, with bellies extending an already steep drop.
Demand for pork bellies generally is strong in the mid-summer when outdoor tomatoes ripen and consumers eat bacon, lettuce and tomato sandwiches – a dynamic known by some livestock traders as “BLT season.”
Pork bellies fell $10.26 to $115.73 per cwt on Tuesday while the pork cutout comprised of other cuts including ribs, hams and loins eased 49 cents to $74.05, according to the USDA.
“The break in the belly price caught a lot of people by surprise,” said independent livestock futures trader Dan Norcini. “The bellies were the one bright spot in the cutout … that brought a lot of negative sentiment into the hogs.”
Cattle futures were mostly lower, easing on technical selling as traders waited to see how cash cattle markets would develop this week in the U.S. Plains.
Weaker cash cattle trades late on Friday weighed on prices during Monday’s session.
Rising prices for corn also pressured cattle, especially feeder cattle prices, as higher feed costs can limit demand for cattle at feedlots.
CME August feeder cattle fell 2.175 cents to 149.325 cents per pound, lowest since July 11. More actively traded August live cattle futures were down 0.750 cent to 107.675 cents.