Chicago | Reuters — Chicago Mercantile Exchange lean hog futures slid on Tuesday as traders eyed large seasonal hog supplies against uncertain domestic consumption and weak exports.
CME October lean hogs settled 2.1 cents lower at 51.425 cents/lb. (all figures US$).
“Supplies are large, and there’s always uncertainty about export demand,” said Doug Houghton, analyst at Brock Capital Management. “Every time we have a run-up in this market, there seems to be a bit of profit-taking.”
Hog slaughter rates improved, with 483,000 head processed on Tuesday, 5.5 per cent more than the same time last week.
Pork exports were down 70 per cent last week, versus the prior four-week average, according to the U.S. Department of Agriculture.
Meanwhile feeder cattle futures strengthened while live cattle remained flat as strong boxed beef prices improved packer margins, keeping processors pulling beef forward, Houghton said.
“The demand looks to be good in the cash market. Expectations for higher cash prices are underpinning futures pretty well,” he said.
CME benchmark October live cattle ended flat at 109.875 cents/lb., while October feeder cattle gained 1.175 cents to end at 146.375 cents/lb.
Cattle slaughter rates climbed to 120,000 head on Tuesday, up 2.6 per cent from a week and a year ago.
Beef packer margins rose to $288.10 per head, from $240.65 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com.
Choice cuts of boxed beef climbed $2.22, to $219.48/cwt at midday, while select cuts increased by $3.02, to $204.96/cwt, according to USDA.
But consumer demand for beef remains uncertain, according to Mike Zuzolo, president of Global Commodity Analytics.
“The summer grilling season is not ending nearly as favourable or as strong as we began it. That’s really where the livestock market price action is going to rest,” he said. “Packers are buying for that right now.”
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.