Chicago | Reuters — Lean hog futures gained on Monday as demand for pork keeps pace with strong production, traders said.
Chicago Mercantile Exchange’s benchmark February lean hog futures contract settled 1.325 cents higher at 68.575 cents/lb. (all figures US$).
“Demand must be good,” said Alan Brugler, president of Brugler Marketing. “Cold storage stocks continue to be low, even though we’re into peak production time. That tells me we’re getting rid of whatever inventory we’re producing.”
Brugler said the market is still absorbing last Friday’s weekly export report from the U.S. Department of Agriculture, which showed strong pork shipments to China.
“I think China’s going to continue to be a big shipper through year end, because of trying to fill the coolers before their Lunar New Year,” he said.
Daily hog slaughter remains on pace with last week and a year ago, with 497,000 head processed on Monday.
Live cattle futures, meanwhile, slipped as traders weighed weak beef exports against strong beef production and climbing boxed beef prices.
“We’ve got good sized cattle — they’re heavy, but we’re going through them. We’re running at close to capacity, even with the large weights,” said Kirk Dawson, commodity broker at Allendale.
Chicago Mercantile Exchange February live cattle futures fell for the second consecutive day, dropping 0.375 cent to 112.875 cents/lb.
Strong boxed beef prices supported the market, with choice cutouts adding 83 cents, to $243.68, and select cuts gaining $1.75, to $222.43.
Packer margins remain high, with beef processors clearing $438.50 per head, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
CME January feeder cattle ended 1.225 cents higher at 141.05 cents/lb., benefiting from a lower corn market.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.