U.S. livestock: CME hogs surge on bullish USDA data

Chicago cattle futures sag

CME December 2021 lean hogs (candlesticks) with 20-, 50- and 100-day moving averages (pink, red and black lines). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures soared on Monday, with the most-active December contract rising its daily limit after a quarterly U.S. Department of Agriculture report showed a smaller-than-expected U.S. hog herd.

CME October lean hogs settled up 2.975 cents at 90.25 cents/lb., and the December contract rose its daily maximum of 4.75 cents to finish at 81.55 cents/lb. (all figures US$). Limits will expand to seven cents for Tuesday’s session, the exchange said.

Hog futures roared higher after USDA late Friday 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.

In particular, analysts noted that the June-to-August pig crop was down 6% from last summer.

“That tells you (hog) supplies are going to stay tight into the end of the year. The first time you have a chance to build supplies back is next summer,” said Don Roose, president of Iowa-based U.S. Commodities.

Higher wholesale pork prices and a significant discount of futures to cash hog prices lent support. The pork carcass cutout was up $1.18 on Monday at $111.95/cwt, the highest since Aug. 27, according to USDA.

On the cattle side, futures fell after USDA’s monthly cattle-on-feed report, also released on Friday, showed Sept. 1 on-feed supplies and August placements above trade estimates.

October live cattle settled down 0.525 cent on Monday at 122.4 cents/lb. and benchmark December fell 0.35 cent to end at 127.8 cents.

November feeder cattle futures tumbled three cents to settle at 155.575 cents/lb.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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