U.S. livestock: CME lean hog futures fall on profit-taking

Chicago | Reuters — U.S. hog futures sagged on profit-taking on Tuesday after a recent run-up to contract highs, traders said.

Live cattle futures also slumped at the Chicago Mercantile Exchange.

The most actively traded June hogs contract has pulled back about 7.5 per cent after setting a contract high on April 5 on expectations that China will further increase its pork imports because of an outbreak of African swine fever, a disease fatal to hogs.

Traders still project that China, home to the world’s largest hog herd, will need to import more pork from the U.S. and other suppliers, such as the EU.

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However, a decline in cash prices on Monday and a lack of fresh news opened the door for some profit taking, said Matthew Wiegand, broker at FuturesOne.

“With the soft cash action, and nothing new to spark that next round of buying, we’re just kind of seeing a pullback,” he said.

The benchmark June lean hogs contract ended down 1.4 cents at 92.375 cents/lb. (all figures US$). October hogs fell 0.225 cents to 92.7 cents/lb.

Traders are waiting for the U.S. Department of Agriculture to report weekly pork export sales on Thursday to see whether China has continued buying.

“We put another good number there and we’ll pop back pretty quick,” Wiegand said.

Last week, USDA reported China bought 23,473 tonnes of U.S. pork in the week ended April 11. That was China’s third biggest purchase since USDA began tracking sales in 2013.

In the cattle market, most-active June live cattle futures have dropped about three per cent from a contract high set on March 22. Prices came under pressure from long liquidation and weakness in the hog market, traders said.

Warmer, drier weather in the U.S. Plains is also allowing cattle to gain weight more easily. The cold and snowy winter previously slowed weight gain in cattle, which consume feed to generate body heat.

CME June live cattle futures fell 0.45 cents to settle at 121.125 cents/lb. August live cattle futures closed down 0.575 cent at 118.2 cents/lb.

August feeders edged up 0.075 cents, to 159.7 cents.

In other news, four of the largest U.S. beef-packing companies were accused in a lawsuit on Tuesday of violating federal antitrust law by conspiring to drive down prices they paid ranchers for cattle.

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

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