Chicago Mercantile Exchange (CME) lean hog futures fell to their lowest level since February, pressured by solid US production on Tuesday. Meanwhile, live cattle futures hit their highest price since March, according to analysts cited by Reuters.
The hog market has seen a 12% decline from a contract high reached last month.
“Every little bounce we’ve got going has been sold,” said Matt Wiegand, commodity broker for FuturesOne.
The drop in hog futures is largely due to increased production, with US government data showing pork processors have slaughtered approximately 50.6 million hogs so far this year, up from 50.3 million last year. On Tuesday, they butchered about 480,000 hogs, unchanged from a week ago but up from 476,006 hogs a year ago, according to the US Department of Agriculture (USDA).
CME June hog futures ended down 0.525 cents at 96.400 cents per pound after hitting their lowest price since February 14.
“We haven’t been able to generate much short covering,” Wiegand added. “We should probably see that at some point.”
In contrast, the cattle market is experiencing a rise in demand with the upcoming Memorial Day weekend, which marks the start of the summer grilling season. Wholesale beef prices have surged over the past week. The select boxed beef cutout rose by $1.95 to $299.35 per cwt, while the choice cutout eased by $0.75 to $312.70 per cwt, according to the USDA.
Meatpackers are now profitable in processing cattle into beef, after losing more than $100 per head last week, reports HedgersEdge.com. Processors have struggled with tight US cattle supplies as ranchers have reduced their herds in recent years. Analysts expect the USDA to report on Friday that the number of cattle on feed as of May 1 was down from a year ago.
CME June live cattle closed 1.5 cents higher at 182.975 cents per pound, while August feeder cattle rose 1.35 cents to 259.825 cents per pound.
