U.S. livestock: Lean hogs end lower

Cash outlook supports live cattle futures

cme august lean hogs
CME August 2019 lean hogs with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures fell about three per cent on Thursday on sluggish cash markets, traders said, retreating after a two-session surge that lifted the August contract to a near-three-week high a day earlier.

CME August lean hogs settled down 2.55 cents at 79.175 cents/lb., one day after climbing to 82.85, the contract’s highest since June 20 (all figures US$). October hogs ended down 1.65 cents at 71.6 cents.

“Hogs are trying to put in a bottom. But (the) cash (market) is not giving them a reason to do so,” said Alan Brugler, president of Brugler Marketing and Management.

The U.S. Department of Agriculture’s U.S. cash pork carcass cutout value was $1.40 lower at midmorning on Thursday, although the afternoon report showed a net increase of 57 cents.

Brugler noted that the July lean hog futures contract settled Thursday at 71.6 cents, at a premium to the latest CME lean hog index, which fell to 70.77 cents. The July contract must converge with the index at expiration.

Meanwhile, USDA reported export sales of U.S. pork in the week ended July 4 at 11,300 tonnes, down 52 per cent from the previous week and 53 per cent from the prior four-week average. However, on a bullish note, shipments of 25,100 tonnes included 8,000 tonnes to China.

“Export sales were dismal for pork. But export shipments were decent, and China, with 8,000 tonnes of that, is exactly what we want to see,” said Craig VanDyke of Top Third Ag Marketing.

CME hog futures had soared in March and April on expectations that China’s swine fever outbreak would prompt China to boost purchases of U.S. pork. But the market erased those gains in May and June, pressured by ample U.S. hog supplies and lukewarm pork sales to China.

CME live cattle futures closed modestly higher Thursday in rangebound trade, supported by expectations for firmer cash cattle trade this week.

“We are seeking the cash market tighten up a little bit, and getting more current,” VanDyke said.

August live cattle futures settled up 0.25 cent at 107.875 cents and October ended up 0.35 cent at 109.325 cents.

CME feeder cattle also rose, bucking pressure from a two per cent increase in Chicago Board of Trade corn futures.

CME August feeder cattle futures rose 0.275 cent to finish at 142.625 cents/lb.

USDA reported export sales of U.S. beef at 21,500 tonnes, up 15 per cent from the previous week and 26 per cent from the prior four-week average.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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