Chicago | Reuters — Lean hog futures on the Chicago Mercantile Exchange ended lower on Tuesday on long liquidation and uncertainty about demand for various cuts of pork, traders said.
Benchmark CME October lean hogs settled down 1.1 cents, or 1.2 per cent, at 87.9 cents/lb., retreating from Monday’s nearly three per cent rise (all figures US$).
Commodity funds hold a net long position in CME hog futures, leaving the market vulnerable to bouts of long liquidation at a time of waning pork export demand from China and gyrating domestic prices.
U.S. wholesale pork cutout values, reported twice a day by the U.S. Department of Agriculture, have been volatile. USDA reported the pork carcass value at midday Tuesday at $127.81 per hundredweight (cwt), up $8.46 from Monday, but the closing afternoon value was revised to $118.12/cwt, a net decline of $1.23 from Monday.
“The volatility in the cutout price, and particularly with some of these major cuts like the loins, hams and bellies, is making people uncomfortable holding positions. It’s creating uncertainty about the demand,” said Dan Norcini, an independent livestock trader.
Cattle futures also fell, pulling back from Monday’s gains on uncertainty about meat packers’ needs for fat cattle despite robust beef prices.
CME benchmark October live cattle settled down one cent at 128.125 cents/lb. and September feeder cattle futures ended down 1.075 cents at 160.925 cents/lb.
“The packers continue to see issues with labour availability (and) the ability to process livestock, which tends to boost the price for beef. At the same time, that tends to depress cattle prices,” said Altin Kalo, economist at Steiner Consulting Group.
Wholesale beef prices continued their climb Tuesday, with choice cuts jumping by $8.26, to $338.06/cwt, according to USDA. Select cuts rose $3.22, to $306.77/cwt.
Declines in Wall Street equity markets and crude oil hung over the markets as investors considered the economic impact of the ongoing spread of the Delta coronavirus variant.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.