Chicago | Reuters –– U.S. lean hogs fell one per cent to a more than four-year low on Monday, while live and feeder cattle also tumbled as investors liquidated long holdings on signs of plentiful supplies.
Hog prices declined in U.S. Midwest cash markets, where pork packers had enough of the animals for their slaughter needs this week, helping to spark the selloff in futures at the Chicago Mercantile Exchange (CME). Heavy snowfall in the region halted some hog deliveries, but with retail demand for the meat light, the packers were uninterested in boosting their bids.
Cattle futures were supported early in the session on expectations of reduced slaughter-ready supplies because of snow and bitter cold. But a bearish U.S. Department of Agriculture cattle inventory report last week that showed aggressive herd expansion proved to be a bigger factor.
“It’s a real surprise how aggressive and quick the expansion is occurring,” said Dennis Smith, a broker at Archer Financial Services.
The USDA inventory report, released after the close of trading Friday, showed a larger supply of cattle and a one per cent jump in calves — indications the herd was starting to turn around after drought and record-high feed prices took it to its smallest since the 1950s in 2013.
CME live cattle for February delivery fell 1.65 cents, to 153.2 cents per pound, reversing from an earlier two-week high of 156 cents (all figures US$).
Many feeder cattle contracts shed their daily price limit of 4.5 cents, with most-active March feeders finishing at 200.7 cents/lb. and declining for the first time in five sessions.
Lean hogs for February delivery eased 1.15 cents, to 66.325 cents/lb. Prices trimmed losses after earlier reaching a contract low of 66.125. On a continuous chart hogs fell to the lowest levels since November 2010.
CME Group data showed open interest in hogs as the smallest since 2011, while the number of live cattle contracts was the lowest since 2009. Investors, including hedge funds, have liquidated positions after each contract rose to record peaks last year.
“The big-money rodeo was in 2014,” said Craig VanDyke, analyst at Top Third Ag Marketing. “The tides have changed in cattle.”
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.