U.S. livestock: CME hogs rise, live cattle slip ahead of USDA reports

Cattle on feed top trade estimates

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

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures climbed on Friday, largely supported by positioning ahead of a key hog inventory report issued by the U.S. Department of Agriculture (USDA) after the close, analysts said.

Higher cash pork prices and the still-wide discount of futures to cash hog prices were also supportive.

Lean hogs are likely to post further gains when futures trading resumes Monday following a bullish USDA quarterly hogs and pigs report that pegged the herd below consensus market expectations.

The inventory of all hogs on Sept. 1 was down four per cent from a year ago, while the number of hogs kept for breeding was down two per cent, both below average estimates. Particularly supportive was June-to-August pig crop that was down six per cent from last summer.

“The summer pig crop coming in down six per cent is the shocking number. That’s going to support the winter contracts. And we’re still seeing the kept-for-breeding numbers holding below a year ago so its also supportive longer term,” said Dennis Smith, commodity broker at Archer Financial Services.

“I’m guessing hog futures are going to be sharply higher on Monday,” he said.

The pork carcass cutout value jumped $6.48 on Friday to $110.77/cwt, the highest since Aug. 27, as ham and loin prices surged, according to USDA (all figures US$).

CME October lean hogs surged late in the session to close 2.525 cents higher at 87.275 cents/lb., while the December contract added 0.3 cent to 76.8 cents/lb.

CME live cattle futures eased on positioning ahead of the monthly USDA cattle-on-feed report, issued after the close, which pegged Sept. 1 on-feed supplies and August placements above trade estimates.

October live cattle fell 0.3 cent, to 122.925 cents/lb., while December shed 0.475 cent, to 128.15 cents.

November feeder cattle futures rose 0.475 cent, to 158.575 cents/lb.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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