U.S. livestock: Lean hogs climb on falling grain futures

April live cattle close lower

CME April 2021 lean hogs with 20- and 100-day moving averages plus CBOT May 2021 corn (yellow line). (Barchart)

Chicago | Reuters — CME Group lean hog futures climbed Wednesday, supported by lower feed grain futures and expectations the U.S. herd will shrink moving into the spring, traders said.

CME’s most-active April lean hogs added 1.65 cents to close at 73.075 cents/lb., while the spot February contract strengthened 1.95 cents to end at 68.425 cents/lb.

Summer month contracts are trading at a significant premium to front-months, with June hog futures 16.075 cents higher than February.

“We’re going to have tighter numbers,” said Scott Varilek, broker at Kooima + Kaemingk Commodities Inc. “There’s some empty slots noted around in the barns currently.”

The CME lean hog index for the two days ending January 18 was 2.5 cent below the February contract at 65.92 cents/lb.

Meanwhile, CME live cattle slipped ahead of Friday’s monthly Cattle on Feed report from the U.S. Department of Agriculture which is expected to show placements of 1.773 million head, down three per cent and larger marketings of 1.845 million head, according to a Reuters survey of analysts.

“We’re looking for less numbers on feed, year over year,” said Varilek, noting that heavier weights have offset the impact of smaller numbers. “We had so much extra weight on them [last year] that we never really got to see what tighter numbers meant.”

CME April live cattle futures ended 0.475 cents lower at 118.875 cents/lb.

Daily cattle slaughter continues to lag behind a year ago, with 120,000 head processed on Wednesday, down 1.6 per cent compared to the same day in 2020.

Boxed beef cutout values strengthened, with select cuts gaining for a fifth consecutive session, adding 84 cents/cwt, to $207.28, and choice cuts adding $1.42, to $218.91/cwt, according to USDA.

Feeder cattle futures also benefited from softer feed grain futures, with March feeder cattle gaining 0.725 cent to settle at 137.525 cents.

— Reporting for Reuters by Christopher Walljasper in Chicago.

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