U.S. livestock: Lean hogs hit one-month low on weak cash values

CME February 2020 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Lean hog futures on the Chicago Mercantile Exchange (CME) fell to a one-month low on Monday, pressed by ample U.S. pork supplies and a discount in the cash hog market relative to futures, traders said.

“We’ve got a problem where we are still seeing big hog numbers,” said Doug Houghton, analyst with Brock Associates, noting weekly U.S. government slaughter data.

The U.S. Department of Agriculture on Monday revised the weekly hog slaughter through Jan. 10 to 2.477 million head, up from 2.373 million a year earlier. .

CME February hog futures ended down 1.35 cents at 65.9 cents/lb. after dipping to 65.575 cents, the contract’s lowest since Dec. 3 but still about six cents above the latest lean hog index of 59.36 cents (all figures US$).

“The nearby February contract got hit hardest because it was holding a substantial premium to the cash index, which was down today and will be down tomorrow,” Houghton said.

Deferred hog futures contracts also declined but found underlying support from hopes an interim U.S.-China trade deal due to be signed on Wednesday will boost U.S. pork exports to China.

U.S. Treasury Secretary Steven Mnuchin on Sunday reiterated Washington’s position that China has committed to increase purchases of U.S. agricultural products to $40 billion-$50 billion annually. But a lack of detail on the accord has left some traders cautious.

CME live cattle futures also sagged on Monday, hit by profit-taking and disappointment that cash cattle traded steady at about $124/cwt in the southern Plains late last week, steady with the previous week.

“The wholesale (beef) market hasn’t been good… There is more product out there, and the market is not absorbing it too well,” Houghton said.

Chicago Mercantile Exchange February live cattle fell 0.875 cent to settle at 126.55 cents/lb. April cattle ended down 0.425, at 127.525 cents.

Feeder cattle futures sold off more sharply, with March futures down 1.6 cents at 145.85 cents/lb., pressured by the weakness in live cattle futures coupled with rising prices for corn, the primary feed grain for cattle.

Chicago Board of Trade March corn futures settled up 3-3/4 cents at $3.89-1/2 per bushel, a one-week high.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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