Chicago | Reuters — U.S. lean hog futures tumbled on Tuesday, with the most-active contract dropping by the daily maximum, due to weak cash prices and technical selling, traders said.
Pork cutout values eased for carcasses, loins, bellies and other products, according to U.S. Department of Agriculture estimates.
December lean hog futures dropped the daily three-cent limit to 67.675 cents/lb. at the Chicago Mercantile Exchange.
The contract had reached its highest price since July on Monday on expectations China will increase pork imports to offset a major decline in its hog herd. China, the world’s largest pork consumer, is suffering a widespread outbreak of African swine fever, a fatal pig disease that was also found for the first time in South Korea on Tuesday.
“It’s a just a roller coaster,” said Dennis Smith, commodity broker for Archer Financial Services in Chicago. “We went up and peaked out yesterday. Now the roller coaster is heading down to some sort of a bottom.”
October live cattle futures ended up 1.35 cents at 99.35 cents/lb. and set a two-week high. October feeder cattle rallied 3.1 cents to 137.3 cents/lb. and exceeded a one-month high.
The markets found support as some livestock producers and traders are expecting cash prices to increase in the coming weeks, after the cash market remained about steady last week.
Cash and futures prices had previously been under pressure after an August fire at a Tyson Foods slaughterhouse removed a key buyer from the market.
Some producers are now reluctant to sell cattle to meat packers at lower cash prices, according to traders.
Packers increased slaughtering at other plants after the Tyson fire to take advantage of soaring profit margins. Packer margins were still estimated at a healthy $377.65 per head, livestock marketing advisory service HedgersEdge.com said.
Packers killed an estimated 118,000 cattle on Tuesday, up by 2,000 from a week ago and down by 1,000 from a year ago, USDA said.
Boxed beef cutout prices eased by $2.66/cwt for select cuts and 85 cents/cwt for choice cuts, according to USDA data.
On Friday, USDA will issue an update on the number of cattle in U.S. feedlots.
— Reporting for Reuters by Tom Polansek in Chicago.