Chicago | Reuters — Chicago Mercantile Exchange lean hog futures tumbled to contract lows again on Wednesday on concerns about lower demand, analysts said.
Worries about the risk for a recession to reduce consumers’ meat purchases hung over livestock markets, particularly for expensive cuts, said Arlan Suderman, chief commodities economist for broker StoneX. Wheat and soy futures also crumbled.
“The whole agriculture sector seems to have a cloud over it — a recession fear cloud — so money flow is negative,” Suderman said.
Demand worries added more pressure to lean hog futures as pork cutout values have declined, traders said.
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The U.S. Department of Agriculture (USDA) priced pork carcasses at $79.86 per hundredweight (cwt), down $1.66 from Tuesday (all figures US$). Hams sank by $4.98, to $70.01/cwt, after a steep drop last week. Bellies, used to make bacon, fell $3.83 to $82.11/cwt.
“One item more than any other has impacted the wholesale price so far ‐ bellies,” Steiner Consulting Group said in a note. “How much belly prices recover in the next three months will be critical for hog values this summer.”
Front-month April lean hogs settled down 0.975 cent at 76.075 cents/lb., after hitting a contract low at 75.95 cents.
Thinly traded May hogs set a contract low at 82.925 cents, before ending down 1.45 cents at 83.25 cents. June hogs closed down two cents at 89.35 cents/lb. and set a low of 89.05 cents.
Meatpackers slaughtered about 478,000 hogs on Wednesday, down from 479,000 a week ago and 482,000 a year ago, USDA said.
Still, hog slaughtering numbers have been higher than USDA’s last quarterly Hogs and Pigs report in December would have suggested, Suderman said. The department will issue the next report on March 30.
“Overall, supplies have been there,” Suderman said.
CME April live cattle settled 0.125 cent weaker at 162.3 cents/lb. April feeder cattle finished down 0.525 cent at 188.25 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
