U.S. livestock: Steep drop in pork belly prices sink CME lean hog futures

Chicago / Reuters – Chicago Mercantile Exchange lean hog futures ended lower on Thursday, pressured by downward-trending cash and wholesale pork prices, traders said.

December closed down 1.525 cents per lb to 59.875 cents, and February was 1.500 cents lower at 63.000.

Cash hog prices in the Iowa/Minnesota hog market on Thursday afternoon sagged $1.25 per cwt from Wednesday to $65.14, the U.S. Department of Agriculture said.

Separate USDA data showed the afternoon’s wholesale pork price had fallen $3.27 per cwt from Wednesday to $80.78, led by the $14.67 plunge in pork belly values.

More hogs are available to packers seasonally at a time when the industry has rebounded from a deadly pig virus.

“There are a lot of hogs and pork out there, so sooner or later we were going to see a big drop in prices for both,” a trader said, adding that retailers are focusing on promoting less pork after the end of October Pork Month.

MOST LIVE CATTLE CONTRACTS SAG

CME live cattle futures ended mostly lower, with October investors anticipating at least $139 per cwt prices for unsold market-ready, or cash, cattle by Friday, traders said.

They said, remaining cattle contracts were pressured by their premiums to cash prices so far this week and expectations of more heavyweight cattle in feedyards and on pastures waiting to come to market.

Spot October, which will expire on Friday, closed up 0.450 cent per lb to 140.125 cents, December ended 0.800 cent lower at 142.800 cents and February finished 1.050 cents lower at 144.325.

Feedlots priced their unsold cattle at $140 per cwt in the belief that packers need them after buying animals earlier in the week than usual, traders and analysts said.

However, they said, processors are balking at paying more for remaining cattle by cutting their slaughter rates to recoup lost margins and underpin wholesale beef costs.

So far, market-ready, or cash cattle in Texas and Kansas sold at $138 per cwt, compared to $134.50 to $138 a week ago, feedlots sources said.

CME spot-October feeder cattle, which expired at noon CDT (1700 GMT) settled down 0.350 cent per lb at 193.150 cents. It finished nearly in line with the exchange’s feeder cattle index for Oct. 28 at 192.94 cents.

Back-month live cattle futures selling pressured other feeder cattle contracts, with November at 191.925 cents, 0.325 cent lower.

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