Chicago Mercantile Exchange lean hog futures gained on Thursday as slaughter rates returned to levels not seen since processing plants closed from COVID-19 outbreaks among workers this spring.
Live cattle futures fell as pre-Labor Day buying wound down and the industry awaited Friday’s monthly Cattle on Feed report from the U.S. Department of Agriculture.
CME October lean hogs gained 2.625 cents to close at 55.175 cents per pound, after hitting the contract’s highest since May 8.
Daily hog slaughter reached 481,000 head on Thursday, headed for a weekly total near 2.633 million head, according to Rich Nelson, chief strategist at Allendale Inc. “This will be the best post-virus processing week,” said Nelson, warning the pace must increase further to overcome a fourth quarter seasonal swell of market-ready hogs.
“Starting mid-September,” he said, “We will need several weeks of 2.75 million head and probably 1-2 weeks of 2.8 million head.”
USDA reported export sales of U.S. pork the week ended Aug. 13 at 20,600 tonnes, nearly double the previous week, but down 27% from the prior 4-week average.
Friday’s Cattle on Feed report may reveal a hefty increase in placements as cattle held back during the height of the slaughterhouse shutdowns move off drought-stricken pastures across the Southern Plains.
A 56% increase in feeder cattle from Mexico may also contribute to the growth in placements, according to Katelyn McCullock, director of the Livestock Marketing Information Center.
“Over the last couple months, we’ve seen really large volumes coming across,” she said. “About 45,000 head more than last year.”
CME benchmark October live cattle ended 1.050 cents lower at 109.775 cents per pound. October feeder cattle lost 0.425 cent to end at 146.375 cents per pound.
Daily trading limits for CME’s live cattle futures contracts will rise to 4 cents per pound, from the current 3 cents and the feeder cattle futures limit will rise to 6 cents per pound, from 4.5 cents, starting Oct. 5, pending approval by the U.S. Commodity Futures Trading Commission, the CME Group said. (Reporting by Christopher Walljasper; editing by Grant McCool)