Chicago | Reuters — U.S. lean hog futures closed mostly lower on Wednesday, setting back from a one-month high set a day earlier in the benchmark June contract as traders mulled the implications of a presidential order for U.S. meat packing plants to remain open, traders said.
President Donald Trump on Tuesday ordered meat-processing plants to stay open to protect the food supply in the United States, despite concerns about coronavirus outbreaks, drawing a backlash from unions that said at-risk workers required more protection.
Some traders initially thought the order might cool rising wholesale prices for pork while easing a backlog of hogs in the country. But futures retreated on Wednesday as traders considered that the livestock bottlenecks might persist, despite the order.
“People began to think about it a little more, and go, ‘Wait a minute, how are they going to put anybody in there? Who is going to slaughter these hogs?’ It’s not going to affect that much on the front end of the market,” said Dan Norcini, an independent livestock trader.
Also, deferred hog futures fell Wednesday as brokers sold those contracts against nearby months, taking profits by unwinding spread positions.
Most-active June lean hog futures on the Chicago Mercantile Exchange settled down 0.675 cent at 55.525 cents/lb. (all figures US$).
Despite the weaker trend, the thinly traded May lean hog contract rose as wholesale pork prices continued to climb. The U.S. pork cutout rose by $2.24 on Wednesday, according to the U.S. Department of Agriculture, reflecting the impact of a drop in the daily hog slaughter as plants close due to the coronavirus infecting workers.
Slaughterhouses killed 271,000 hogs on Wednesday, down from 363,000 head a week ago and 471,000 a year ago, USDA said. The daily cattle slaughter, at 72,000 head, was down from 85,000 a week ago and 121,000 a year ago.
CME live cattle futures closed mixed, with the most-active June contract drifting lower on worries about a growing backlog of cattle due to meat-packing slowdowns, and expectations that cash cattle prices would decline as a result.
June live cattle settled down 0.425 cent at 84.275 cents/lb. while the August contract rose 0.25 cent at 90.775 cents.
CME August feeder cattle futures rose 0.525 cent to finish at 128.45 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.