Chicago | Reuters — U.S. lean hog futures plunged by as much as the daily trading limit on Friday and ended sharply lower after the U.S. Department of Agriculture (USDA) estimated supplies above already-high trade expectations.
Economic concerns amid rising novel coronavirus infections added pressure to hogs and also dragged down cattle futures, which finished the day flat to mostly lower. Wall Street’s major indexes tumbled more than two per cent on Friday.
Livestock markets have been hard hit by coronavirus-related closures of restaurants and food service businesses, key outlets for items like bacon and high-end cuts of beef. Closures at packing plants have also backed up supplies of market-ready animals, pressuring cash markets.
USDA’s quarterly hog inventory report, released after Thursday’s close, showed a record-large June 1 supply of hogs that was up 5.2 per cent from a year earlier. Analysts, on average, had expected a 3.7 per cent increase.
“The market reacted to the report and the report came in a lot more bearish than most of us were expecting,” said independent trader Dan Norcini.
A greater-than-expected supply of heavier hogs put pressure on the actively traded August contract, which traded limit-down during the session, as those animals will be coming to market in the near term, he said.
Chicago Mercantile Exchange (CME) July lean hogs dropped 1.65 cents to 45.275 cents/lb., while August ended down 3.2 cents at 48.125 cents/lb. (all figures US$). July, August and October futures posted contract lows.
Cattle futures were weighed down by spillover pressure from hogs and by concerns about beef demand as some states stalled or reversed their reopening plans due to rising coronavirus infections.
CME August live cattle ended down 0.05 cent, at 96.025 cents/lb. Deferred-month contracts were down as much as 0.975 cent. August feeder cattle fell 0.65 cent, to 132.6 cents/lb.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.