U.S. lean hog futures on the Chicago Mercantile Exchange jumped higher on Wednesday on fears of African Swine Fever rising across parts of Asia, as well as tight domestic supply as the U.S. rebuilds its hog herd after culling during the height of the COVID-19 pandemic, analysts said.
The Philippines reduced tariffs on pork, aiming to import 400,000 tonnes in 2021, more than double than originally planned.
“They’re basically telling the world, ‘we need pork and we need it now. We can’t wait for our hog herd to be rebuilt,’” said Dennis Smith, commodity broker at Archer Financial.
CME June lean hogs settled 2.275 cents higher at 107.900 cents per pound, after reaching 108.125. Nearly all contract months found new life-of-contract highs.
The CME’s lean hog index, a two-day weighted average of cash prices, climbed to $100.34 per cwt, its highest since October 17, 2014.
Despite a smaller U.S. herd, daily hog slaughter has remained at a strong pace, with 494,000 hogs processed Wednesday, up 21,000 head from the same date a year ago, according to the USDA.
CME live cattle also added, with boxed beef leading the market higher.
Choice cuts of boxed beef added $3.54 to $266.31 per cwt and, in the last week, have jumped $19.19 per cwt. Select cuts gained $3.89 to $255.19 per cwt, according to the U.S. Department of Agriculture.
“It’s all due to tremendous demand for U.S. beef. Export demand, domestic demand, food service restocking. You name it, it’s coming at the market,” Smith said.
CME June live cattle settled 0.650 cent higher at 125.275 cents per pound after setting a contract high of 125.350 cents, as well as life-of-contract highs in the August and October 2021 contract months. May feeder cattle futures added .90 cent to 152.675 cents per pound, notching life-of-contract highs from August 2021 on.
Rising beef prices have led to soaring beef packer margins, reaching $555.35 per head on Wednesday, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC. (Reporting by Christopher Walljasper; Editing by Lisa Shumaker)