U.S. livestock: CME lean hogs touch highest since April

CME October 2018 lean hogs, with 20-day moving average in red. (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose for the fourth consecutive session on Wednesday and touched their highest prices in more than five months.

CME October hogs traded up to 67.550 cents/lb., the contract’s highest price since April 20, before paring gains (all figures US$). It ended up 1.05 cents, to 67.475 cents/lb.

Deferred contracts ended lower amid concerns about increasing supplies, traders said. December hogs slipped two cents, to 57.15 cents/lb.

The U.S. Department of Agriculture said on Wednesday the average weight for hogs in the week ended Sept. 29 was 280 lbs. in a reporting district that includes Iowa, southern Minnesota and South Dakota. That was down 0.7 per cent from a year ago.

In recent weeks, average weights were down more than one per cent from the previous year, and the smaller year-on-year decline fueled worries that rising hog weights would expand supplies, said Rich Nelson, chief strategist for Illinois-based broker Allendale.

“We had a little market concern about this morning’s weekly hog weight report,” he said.

Increasing supplies are a concern because China has imposed tariffs on imports of U.S. pork as part of a trade row between the world’s two largest economies. Exports of U.S. pork parts to China have declined as a result, leaving more supply on the domestic market.

In live cattle futures, prices dropped as traders booked profits after prices rose for three consecutive sessions, traders said. On Monday, December live cattle futures reached a contract high and the highest price for a front-month contract since April.

“We might have some people questioning how high these December through summer 2019 contracts need to be,” Nelson said.

Large supplies are looming over cattle markets, after U.S. ranchers expanded their herds to take advantage of low prices for feed grains and strong demand for beef.

There were 11.1 million U.S. cattle and calves being fed for slaughter as of Sept. 1, a record for that date since USDA began tracking the data in 1996.

CME October live cattle futures settled down 0.775 cent at 113.2 cents/lb. Most active December lost 1.075 cents, at 118.4 cents.

CME October feeder cattle finished down 1.2 cents at 157.875 cents/lb.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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