Chicago | Reuters — U.S. livestock futures weakened on Wednesday under pressure from large numbers of cattle and hogs and uncertainty over demand, traders said.
Declines in the markets reflected expectations that meat supplies will remain plentiful, after farmers expanded their herds.
Beef production in the third quarter of 2019 is expected to top seven billion lbs., up three per cent from a year earlier, according to U.S. Department of Agriculture (USDA) data issued on Tuesday. Output in the fourth quarter is seen at 6.95 billion, up about 1.3 per cent from the previous year.
“We’ve just got a lot of beef to wade through,” said Dennis Smith, commodity broker form Archer Financial Services in Chicago. “It’s going to stay in a downtrend.”
Most actively traded August live cattle fell 1.625 cents to 105.2 cents/lb. at the Chicago Mercantile Exchange (all figures US$).
CME August feeder cattle dropped 0.325 cent, to 137.8 cents/lb.
CME July lean hogs ended flat at 84.375 cents/lb., while August hogs slumped 0.45 cent, to 82.525 cents/lb.
Hog traders on Thursday will review weekly export sales data for sales of U.S. pork to China.
China, the world’s largest pork consumer, is expected to increase total imports because an outbreak of the fatal hog disease African swine fever is reducing its herds.
China’s ministry of agriculture and rural affairs said on Tuesday that the southern province of Guizhou confirmed a new outbreak of African swine fever in Duyun city.
China has reported more than 120 outbreaks of the disease since it was first detected in the country in early August last year.
“The lack of any real commitment from China to be buying U.S. pork is a little negative,” said Brian Hoops, president of U.S. broker Midwest Market Solutions.
Rising U.S. grain prices could eventually help support CME livestock futures by making it more expensive to feed farm animals, analysts said.
Corn and soybean futures reached one-week highs at the Chicago Board of Trade on concerns about wet weather disrupting plantings and threatening yields.
“If corn prices start escalating and get real high, it will discourage overfeeding of animals, so in theory weights should come down,” Smith said.
“It could end any expansion talk or desires in both markets — cattle or hogs.”
The average weight for hogs in Iowa and southern Minnesota, two major producing areas, was 285.2 lbs. in the week ending June 8, up 2.3 per cent from last year, according to USDA.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.