U.S. livestock: Hogs mostly higher ahead of USDA inventory data

CME feeder cattle firm up on lower corn prices

Chicago | Reuters — U.S. lean hog futures were mostly higher on Thursday, lifted by firmer cash hog markets and position squaring ahead of a quarterly hog inventory report that was released after the close.

Futures have been sliding for most of the past two months as hog supplies swelled due to numerous packing plant closures as workers were infected by the coronavirus.

Prices in both cash and futures markets have been showing signs of bottoming, with cash hogs in the Iowa and southern Minnesota cash market trading $1.50/cwt higher on Thursday (all figures US$).

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Chicago Mercantile Exchange July lean hogs jumped one cent, to 46.925 cents/lb., while actively traded August added 0.075 cent to settle at 51.325 cents/lb. Deferred contracts were up as much as 1.075 cents.

Futures, however, could come under pressure on Friday after the U.S. Department of Agriculture (USDA) released its latest hog inventory report.

The agency pegged the June 1 swine inventory up five per cent from a year earlier at a record high for the period and ahead of trade expectations for a 3.7 per cent rise. It was also a record-large quarterly supply for a second straight quarter, USDA data showed.

The 120- to 179-lb. hog category was particularly bearish, analysts said, suggesting hog prices would remain under pressure as hog supplies could again overwhelm available slaughter capacity.

“Fall slaughter is going to be huge and we’re going to stay under price pressure for much of the fall,” David Miller, chief economist for Decision Innovation Solutions, said during a National Pork Board post-report conference call.

CME live cattle futures ended mixed, while feeder cattle were firmer, helped by lower corn prices.

August live cattle were 0.275 cent lower at 96.075 cents/lb. while August feeder cattle gained 0.375 cent to close at 133.25 cents/lb.

— Reporting for Reuters by Karl Plume, Tom Polansek and Julie Ingwersen in Chicago.

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