Chicago | Reuters — Chicago Mercantile Exchange lean hog futures fell for a fourth consecutive session on Tuesday led by the actively traded February contract, which hit a 4-1/2-week low on pressure from its premium over cash hog prices.
Ample hog and pork supplies weighed on nearby futures contracts, while losses in deferred months were less severe as investors anticipated improved export demand from China, where the domestic hog herd has been hard hit by African swine fever.
A new case of the disease was confirmed on Tuesday, bringing the total of affected farms to about 90.
The CEO of major meat packer JBS said the outbreak may benefit exporters in the United States and Brazil.
But China has thus far bought only modest amounts of U.S. pork as tariffs enacted by Beijing in response to U.S. duties on Chinese products remain in effect.
“All the African swine fever headlines have been traded. They’re still a fantasy. We haven’t seen the really big (export) numbers yet, just a few sales,” said Craig VanDyke, analyst with Top Third Ag Marketing.
The most active CME February hog futures contract fell 1.175 cents to 62.65 cents/lb., breaking through chart support at its 100- and 200-day moving averages (all figures US$). The cash-settled contract remains at a large premium to the latest CME lean hog index of 55.13 cents.
“The hog market has carried a premium to cash for a while and with the December contract going off the board last week, we’re just narrowing that spread,” VanDyke said.
Positioning ahead of Thursday’s U.S. Department of Agriculture quarterly hogs and pigs report also weighed on futures. Analysts surveyed ahead of the report said, on average, that the U.S. hog herd expanded by 2.7 per cent in the September-December quarter.
Live cattle futures rebounded on Tuesday after three days of declines, underpinned by firm cash cattle markets and higher beef prices.
CME February live cattle rose 1.025 cents and settled at 122.575 cents/lb., holding support at its 20- and 50-day moving averages. CME January feeder cattle futures were up 0.825 cent at 146.2 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.