U.S. livestock: Lean hogs end firm in rebound after contract lows

Live cattle up on bargain buying

CME April 2020 lean hogs with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. hog futures closed mostly higher on Monday, with the benchmark April contract rebounding from a life-of-contract low on slightly firmer cash markets, traders said.

Rallies were capped by continued uncertainty about the impact of the coronavirus on demand for commodities in China, the world’s top pork consumer.

Fears of economic fallout from the virus pressured livestock futures last week on the Chicago Mercantile Exchange, and Chinese commodity and equity markets plunged on Monday as Asian trading resumed following an extended Lunar New Year break.

The coronavirus epidemic, which has caused 361 deaths as of Sunday and infected more than 17,000 people in China, has been declared an international emergency by the World Health Organization.

Still, CME Group lean hog futures bounced, with the most-active April contract settling up 1.125 cents at 62.725 cents/lb. after hitting a contract low at 61 cents (all figures US$). Front-month February hogs fell 0.825 cent to end at 56.3 cents.

“The cash and cutout showed a little bit of stability,” said Matthew Wiegand, commodity broker for FuturesOne. “The absence of any fresh bad news… was probably the biggest thing in the hogs today,” Wiegand said.

The U.S. pork cutout rose 27 cents on Monday afternoon, and cash hog prices in the closely watched Iowa and southern Minnesota market rose 19 cents, according to the U.S. Department of Agriculture.

CME live cattle futures also closed higher on bargain buying amid signs the market was oversold.

April live cattle futures ended up 1.05 cents at 120.725 cents/lb. after dipping to 119.1 cents, a 3-1/2 month low. Spot February futures ended up 0.3 cent at 121.675 cents, while cash cattle changed hands last week at mostly $122 a head in the southern Plains.

“We are trading at a discount to where cash was last week, and I think that should allow for a decent amount of short-covering,” Wiegand said.

CME March feeder cattle futures rose 0.575 cent to end at 136.65 cents/lb.

The USDA late Friday reported all cattle and calves in the United States as of Jan. 1, 2020, at 94.4 million head, down from 94.8 million head a year earlier.

“The inventory report (was) a bit friendly on Friday, with the overall numbers down year-on-year,” Wiegand said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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