Chicago | Reuters – U.S. hog futures eased back on Monday, ahead of a quarterly government report that is expected to show a healthy boost to the size of the U.S. hog herd, traders said.
The U.S. Department of Agriculture’s quarterly Hogs and Pigs report is expected to show the herd increased 2.9 percent in the September-November quarter from a year earlier, according to a Reuters survey of analysts.
“It comes down to a supply issue,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. “We expect the report to show record supplies and big animal weights, and we haven’t offset that with massive demand.”
Traders and analysts are focusing on exports to China because it is the world’s top pork consumer and has lost about half its herd over the past year and a half to African swine fever, a deadly hog disease.
China’s pork imports in November did surge more than 150 percent from a year ago to 229,707 tonnes, the highest since at least 2016, data from the General Administration of Customs showed on Monday. The world’s top consumer of the meat faces a severe domestic supply shortage and wholesalers are stocking up on supplies ahead of China’s Spring Festival Holiday.
“But those numbers aren’t yet the massive buying from China that would balance out – or overbalance – the supplies we’re currently seeing in U.S. pork,” Roose said.
U.S. farmers have expanded herds to supply slaughterhouses that opened in recent years and amid expectations for increased Chinese demand due to African swine fever.
Chicago Mercantile Exchange (CME)’s most actively traded February lean hog futures slipped 0.425 cent on Monday, closing at 70.250 cents per pound.
Meanwhile, U.S. cattle futures were somewhat pressured from a recent USDA report showing that U.S. cattle producers placed more animals than expected into feedlots last month.
The USDA on Friday said 2.09 million head of cattle were placed in feedlots in November, up 4.9 percent from a year earlier. Analysts surveyed by Reuters were expecting a 1.1 percent increase.
CME’s most actively traded February live cattle futures eased down 0.125 cent to 125.675 cents per pound. January feeder cattle futures ended down 0.750 cent at 143.525 cents per pound.