Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose more than two per cent on Tuesday, with most contract months setting life-of-contract highs on fund-driven buying and worries about a winter storm that could slow the transport of animals at a time of tight U.S. hog supplies, traders said.
Benchmark CME April lean hogs settled up 1.975 cents at 97.675 cents/lb. after recording a contract high at 99.15 cents (all figures US$). Most deferred months set contract highs as well.
A major winter storm is expected to wallop much of the central U.S. through Thursday, bringing heaving snow, freezing rain and ice, the National Weather Service said. Many cattle and hog feeding operations are in the storm’s path.
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“U.S. (hog herd) numbers are down, and it looks like they are going to stay down into the summer,” said Don Roose, president of Iowa-based U.S. Commodities, noting that the U.S. Department of Agriculture’s last quarterly hog report on Dec. 23 showed the U.S. hog herd was down four per cent from a year earlier.
“On top of that, in all these markets, you have funds that want a share of the commodity business, and (are) lightening up on equities,” Roose said.
The wholesale pork carcass cutout value fell by 79 cents, to $93.72 per hundredweight, by midmorning, but the afternoon update was delayed until Wednesday due to “packer submission issues,” USDA said.
Live cattle futures rose, with most months hitting contract highs one day after the USDA reported the U.S. beef cow herd at 30.1 million head as of Jan. 1, down two per cent from a year earlier and the lowest since 2015.
“The (USDA) report is saying we still have (herd) liquidation going on. That is giving a bullish tint to the market,” Roose said.
CME April live cattle futures settled up 0.85 cent at 145.375 cents/lb. after recording a contract high at 146.225 cents. March feeder cattle futures ended up 0.675 cent at 163.7 cents/lb.
The U.S. daily slaughter pace continued to increase for both cattle and hogs, following a lull in recent weeks tied to worker shortages at meat packing plants. Tuesday’s cattle slaughter reached 121,000 head, up from 118,000 a week ago, and the hog kill totaled 480,000 head, up from 471,000 a week ago.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
