Chicago | Reuters — U.S. lean hog futures on Thursday soared to their highest prices in more than 10 months, as meat demand continued to strain processor capacity and COVID-19 cases are rising in the United States, traders said.

Thursday’s daily U.S. hog slaughter was 490,000 head — 2,000 fewer than the same period last year, according to data published by the U.S. Department of Agriculture.

For the week to date, packers have slaughtered 14,000 fewer hogs, compared to the same period a year earlier.

“I think we’re at slaughter capacity right now, especially with the lockdowns,” said Mike Zuzolo, president of Global Commodity Analytics.

Zuzolo noted that even though government data is showing that processing volumes are close to pre-pandemic levels, “I don’t think we can get much bigger than where we already are.”

CME December lean hogs added 1.45 cents, to 69.875 cents/lb., the highest since Dec. 5, 2019 (all figures US$).

But higher futures prices have some packers hunting for ways to bolster their profit margins. Zuzolo said one of his client’s had a packer not take his contracted hogs, and instead opted to buy animals in the local cash market.

“They could buy hogs cheaper on the open market than they could filling his contract prices,” Zuzolo said.

Meanwhile, live cattle futures dipped, as impending COVID-19 lockdowns in Europe threaten global meat demand, traders said.

CME December live cattle futures dipped 0.725 cent to 109.55 cents/lb., while CME January feeder cattle fell 1.225 cents to 132.1 cents/lb.

“We’re highly dependent on demand,” said Don Roose, president of U.S. Commodities. “It looks like this next pandemic relief package is on hold until after the election, so the buying habits may be slowing down and the concern with COVID on the rise.”

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.