U.S. livestock: Hog futures drop to 3-1/2 year low

Cattle also limit down on coronavirus pandemic

CME April 2020 lean hogs, with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. hog futures dropped to a 3-1/2 year low on Thursday while cattle tumbled as recession concerns and surging U.S. unemployment due to the coronavirus pandemic triggered broad liquidation across the battered livestock markets.

Both live and feeder cattle and lean hogs dropped by their daily trading limits for a second straight session, sending most live cattle contracts and all lean hog contracts to new life-of-contract lows.

Beef and pork prices have been falling sharply after a recent surge that was fueled by consumer stockpiling as several U.S. states issued stay-at-home orders and shuttered restaurants to stem the tide of coronavirus infections.

Cash cattle and hog prices have also faded as packers are slowing meat output to closely match weaker demand, and that is backing up supplies of market-ready animals.

“We pulled all this demand forward… Now, the pipeline’s full and not moving like it was,” said Matthew Wiegand, commodity broker for FuturesOne.

Chicago Mercantile Exchange (CME) April live cattle fell to 92.825 cents/lb., while actively traded June futures finished at 83.075 cents, both down by their expanded 4.5-cent daily limit (all figures US$).

May feeder cattle futures ended at 111.65 cents/lb., one of five contracts that ended down the expanded daily limit of 6.75 cents.

April lean hog futures ended at 44.7 cents/lb., down 4.5 cents and the lowest for a spot contract since October 2016. Most-active June settled at 52.825 cents, also down by the expanded 4.5-cent limit.

The trading limits for all three commodities will remain at their expanded levels of 4.5 cents on Friday for live cattle and lean hogs, and 6.75 cents for feeders.

“The bulk of our bacon goes to restaurants and that’s why bellies are as cheap as they’ve been in 20-odd years. We saw the ribs cave in because people aren’t going for barbecue,” Wiegand said.

The wholesale pork cutout value on Thursday fell to $59.21/cwt, down $18.40 in the last week, according to the U.S. Department of Agriculture. Pork belly and rib prices are down nearly 40 per cent in that time.

The choice boxed beef cutout dropped to $232.64/cwt, down $20.93 from a week ago, according to USDA.

Cash cattle at southern U.S. Plains feed lot markets traded $8/cwt lower this week, while hogs in the closely followed Iowa and southern Minnesota market traded more than $7 lower on Thursday alone, USDA said.

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

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