LIVESTOCK-Nearby lean hog futures slide as slaughter rebounds

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Chicago Mercantile Exchange nearby lean hog futures hit a six-week low on Wednesday as the U.S. slaughter pace continued to recover, generating pork supplies that pressured wholesale prices and packer margins, traders said.

CME June lean hogs ended down their daily limit of 3.750 cents, at 48.650 cents per pound, while most-active July futures settled down 1.400 cents at 53.475 cents after dipping to 53.350, the contract’s lowest since April 24.

The U.S. hog slaughter CDS-TODAY-HOGS totaled 429,000 head on Wednesday, the most since mid-April, when worker illnesses from the coronavirus pandemic started causing numerous U.S. meat packing plants to shut down temporarily.

The U.S. pork cut-out, an indication of wholesale prices, was down 27 cents at midmorning at $74.10 per cwt, the U.S. Department of Agriculture said. The USDA updated the cutout later on Wednesday to $75.01 per cwt, a net increase of 64 cents for the day, but the value was still down from roughly $90 per cwt last week.

Traders awaited the USDA’s weekly export sales report on Thursday to see whether China, the world’s top pork consumer, bought much U.S. pork in the week ended May 28. Weekly U.S. pork sales to China averaged more than 23,000 tonnes from early March through April, but net sales through the first three weeks of May were a net negative 417 tonnes.

“There is not a lot of good news out there (with) these worries about export demand, and the wholesale market not holding together. And we still have a lot of hogs in the pipeline,” said Altin Kalo, agricultural economist for Steiner Consulting.

CME live cattle futures rose on bargain buying after a three-session slide. However, weaker cash cattle prices and falling wholesale beef prices hung over the market, capping rallies. Market-ready cattle traded as low as $109 per cwt in the U.S. Plains on Wednesday, the USDA reported, down from last week’s highest trades at $120 per cwt.

CME June live cattle futures settled up 0.150 cent at 95.450 cents per pound and benchmark August rose 1.150 cents to end at 97.350 cents.

CME August feeder cattle futures closed up 0.800 cent at 134.225 cents per pound. (Reporting by Julie Ingwersen; Editing by Tom Brown)

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