U.S. livestock: CME hog futures extend rally on USDA data

Feeder cattle up on bargain-buying

CME December 2021 lean hogs (candlesticks) with Bollinger bands (20,2). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures rose on Tuesday for a fourth straight session as traders continued to digest Friday’s U.S. government report that signaled tighter hog supplies into 2022, analysts said.

CME October lean hogs settled up 1.425 cents at 91.675 cents/lb. and the benchmark December contract rose 2.025 cents to settle at 83.575 cents, after reaching 83.975 cents, its highest since Aug. 4 (all figures US$).

Futures have been driven by the quarterly hog report from the U.S. Department of Agriculture (USDA), released after Friday’s market close, that said the U.S. Sept. 1 hog inventory was down four per cent from a year ago and the number of hogs kept for breeding was down two per cent, both below trade expectations.

USDA also said the June-to-August pig crop was down six per cent from the previous year, indicating tight supplies of market-ready hogs this winter.

“It’s a bullish scenario,” said Ted Seifried, chief market strategist for Zaner Ag Hedge Group.

Hog futures were able to extend their rally despite broad declines in grains and energy futures tied to a sharply higher dollar, Seifried noted.

Meanwhile, CME cattle futures drifted lower for a third straight session, following the declines in outside commodity markets and Wall Street equities.

October live cattle settled down 0.4 cent at 122 cents/lb. and benchmark December fell 0.3 cent to end at 127.5 cents.

Wholesale beef prices continued their month-long slide, with choice cuts down $1.14 at $301.56 per hundredweight (cwt) and select cuts down three cents at $274.35/cwt, according to USDA.

CME feeder cattle futures rose on bargain-buying after the November contract touched a one-week low, and signs of cheaper feed grain costs as CBOT corn futures fell. CME November feeder cattle settled up 1.475 cents at 157.05 cents/lb.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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