Chicago | Reuters –– U.S. lean hog futures touched a two-month low on Friday as meat packers slaughtered more pigs to profit from high margins.
Pork processors killed an estimated 485,000 pigs, up 1,000 from a week earlier and 20,000 from a year ago, the U.S. Department of Agriculture said. They are projected to slaughter 2.75 million pigs this week, up from 2.69 million a week earlier and 2.63 million a year ago.
Packers’ margins have climbed as large supplies of hogs have weighed on prices for the farm animals. Margins were $87.60 per head, up from $68 a week earlier, according to livestock marketing advisory service HedgersEdge.com (all figures US$).
Chicago Mercantile Exchange (CME) December lean hogs reached their lowest price since Sept. 11 before ending up 0.45 cent at 63.2 cents/lb. All other contracts were lower, with February hogs dropping 1.375 cents to 72 cents/lb.
Meat packers and producers are hoping for further U.S. pork sales to China, which is grappling with a fatal pig disease, African swine fever, that has killed up to half its herd since August 2018. China is the world’s largest hog producer and pork consumer.
Sales are being hampered, though, by steep tariffs that Beijing imposed on imports of U.S. pork last year as part of the countries’ trade war.
Net sales of U.S. pork to China from Nov. 1 to 7 were 5,549 tonnes, the highest in a month, according to USDA data. Shipments of U.S. pork to China reached 10,933 tonnes, in line with recent weeks.
China also bought 1,431 tonnes of U.S. beef during the same period, the biggest weekly purchase USDA has reported since May 2002. China banned imports of U.S. beef for 14 years until 2017.
“Beef export sales perked up quite a bit,” said Bob Brown, an independent U.S. livestock market analyst.
February live cattle futures edged up 0.05 cent to 124.975 cents. January feeder cattle rose 0.225 cent to 144.275 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.