Chicago | Reuters — U.S. hog and cattle futures plummeted to the lowest levels in years on Friday, extending recent declines amid abundant animal and meat supplies and as investors squared up their books on the final day of the quarter, traders said.
Chicago Mercantile Exchange lean hogs fell roughly five per cent for their biggest daily declines in weeks while live cattle dropped by their daily limit of three cents/lb.
Hogs sold off ahead of a quarterly U.S. Department of Agriculture hogs and pigs report released after the close of trading, in which the government showed the U.S. hog herd to be larger than analysts anticipated in data that could portend further losses when trade resumes on Monday.
USDA said the U.S. hog herd was 70.851 million head, the highest for any quarter in a dataset started in 1988. The herd was 102 per cent of last year, up from analyst estimates for 101.2 per cent.
“You have too much meat around,” said John Ginzel, analyst at the Linn Group brokerage. “The packers and retailers are digging in their heels and widening out their margins at the expense of the feedlots and hog producers.”
CME lean hogs on a continuous chart fell to 49.025 cents/lb., the lowest level since Oct. 6, 2009. For the quarter, hogs declined 40 per cent for their worst quarterly performance in Reuters data going back to 1973.
Most-active December hogs settled down to their daily price limit of three cents at 43.975 cents/lb.
Front-month October live cattle futures fell to 98.9 cents/lb., the lowest point on a continuous chart since November 2010. Cattle futures for the quarter lost 17 per cent.
CME October feeder cattle finished 4.35 cents lower at 123.15 cents/lb., rising slightly from their earlier lows of 123 cents.
Trading limits in live cattle and lean hogs will be expanded to 4.5 cents for Monday’s session, the CME Group said on its website.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.