Chicago | Reuters — Chicago Mercantile Exchange lean hog futures climbed to a new contract high on Tuesday on concerns about tightening U.S. supplies, analysts said.
Nearby live cattle and feeder cattle futures also strengthened.
U.S. cold storage data, issued after the markets closed on Monday, was supportive for hog and cattle futures, analysts said. Frozen pork supplies on Dec. 31 were down four per cent from a year earlier, while frozen beef supplies were down six per cent on the year, the U.S. Department of Agriculture said.
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Meat companies have struggled to rebuild pork inventories since the COVID-19 pandemic temporarily shut slaughterhouses in spring 2020, lowering production. The size of the U.S. hog herd has also declined amid pig diseases.
“Pork supplies in the freezer remain tight,” said Steiner Consulting Group in a daily livestock report.
CME April lean hogs finished up 1.925 cents at 97.25 cents/lb. and set a contract high of 97.375 cents. The contract has gained 16 per cent since hitting a three-week low on Jan. 11.
The gains widened the spread between futures and cash prices. The wholesale pork carcass cutout value fell by $3.20, to $92.46/cwt on Tuesday, USDA said.
Traders digested a California state court ruling that delayed enforcement for grocers and restaurants of a farm-animal welfare law known as Proposition 12 that required pigs to be raised with more space starting Jan. 1.
Farm and meatpacking groups praised the court decision. However, California officials said U.S. farmers that supply pork to the state will still be subject to enforcement of new square-footage requirements for hogs.
In the beef markets, CME April live cattle futures ended up 0.025 cents at 140.1 cents/lb. March feeder cattle futures ended down 1.4 cents at 159.85 cents/lb., after falling on Monday to their lowest price since Nov. 12 at 158.225 cents.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
