U.S. livestock: CME hog futures touch four-week high

Chicago | Reuters — U.S. hog futures touched a four-week high on Thursday before retreating and may rise further next week because of smaller-than-expected national inventory numbers, analysts said.

The U.S. hog herd totaled 74.2 million head on Dec. 1, down four per cent from a year earlier, the U.S. Department of Agriculture said in a quarterly report. Analysts surveyed by Reuters on average expected the herd would be 2.9 per cent smaller.

The inventory of market hogs was down four per cent from last year at 68 million head, USDA said, while analysts were expecting a 3.1 per cent drop.

The larger declines were a surprise because profits for hog producers were good in 2021, said Ron Plain, extension economist emeritus at the University of Missouri.

The USDA report shows the country will have a “tight supply of hogs for the next five months and likely some pretty good prices for hog producers,” Plain said.

Hog farmers may expand their breeding herds if the USDA report leads to higher prices, said David Miller, chief economist for Decision Innovation Solution.

Before the report was released, Chicago Mercantile Exchange (CME) February lean hog futures settled down 0.125 cents at 83.225 cents/lb. The contract reached its highest price since Nov. 26 at 83.925 cents/lb. earlier in the session.

USDA, in a separate report, said the number of U.S. cattle on feed for slaughter on Dec. 1 was 11.985 million head, down 0.4 per cent from a year earlier. That was largely in line with analysts’ expectations.

Before the data were released, CME February live cattle settled up 2.25 cents at 139.625 cents/lb. and reached its highest price since Dec. 7 at 139.725 cents.

CME March feeder cattle closed 1.825 cents higher at 163.75 cents and reached its highest price since Dec. 17 at 164.225 cents.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.