Chicago | Reuters — U.S. lean hog futures rose their daily limit on Monday on fears of tightening domestic pork supplies as the coronavirus pandemic forces slowdowns at slaughterhouses, analysts said.
June lean hog futures on the Chicago Mercantile Exchange settled up the daily maximum of 3.75 cents at 55.275 cents/lb., the contract’s highest since April 8 (all figures US$). Daily limits will widen to 5.5 cents for Tuesday’s session.
The world’s biggest meat companies — including Smithfield Foods, Cargill, JBS USA and Tyson Foods — have halted operations at about 20 slaughterhouses and processing plants in North America since April as workers fall ill.
With meat-packing plants unable to receive livestock, some hog and poultry producers are being forced to cull their herds and flocks.
“We are taking hogs out of supply that are not going to go into the meat supply,” said Doug Houghton, analyst with Brock Associates.
The U.S. wholesale pork cutout rose by $3.76 on Monday, according to the U.S. Department of Agriculture, reflecting tighter supplies. The U.S. hog slaughter totaled 1.986 million head in the week ended April 25, USDA said, down from a weekly total of nearly 2.8 million head in late March.
CME cattle futures closed higher on spillover strength from hogs along with historically high beef packer margins.
CME June live cattle settled up 1.425 cents at 84.05 cents/lb. August feeder cattle futures rose 0.875 cent at 127.275 cents/lb.
USDA late Friday said the number of cattle in U.S. feedlots as of April 1 was 95 per cent of the year-earlier total, matching trade expectations. Monthly placements were 23 per cent lower than March 2019. Analysts had been expecting placements to fall 21 per cent.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.