Chicago | Reuters — U.S. lean hog futures declined on Friday, pressured by soft cash markets and long liquidation, traders said.
The benchmark June lean hogs contract on the Chicago Mercantile Exchange recorded its third straight weekly decline after soaring to an April 5 contract high at 99.825 cents/lb. (all figures US$).
The contract closed Friday down 1.025 cents at 88.75 cents/lb. after dipping to 88.475 cents, a 3-1/2 week low.
Traders attributed the early-April rally to expectations the spread of African swine fever in China, home to the world’s largest hog herd, would spur U.S. pork exports.
But weak domestic hog prices have since hung over the market, and traders were still digesting Thursday’s weekly export sales report from the U.S. Department of Agriculture that showed no new U.S. pork sales to China for the week ended April 18.
“There is so much length to this market, especially in the summer months, and there is some uncertainty whether the demand is going to show up to the degree that people think,” said Altin Kalo, agricultural economist for New Hampshire-based Steiner Consulting.
“You run up the market on speculation and demand, but then you have to keep feeding it. People are focused on the cash side (and) it’s got a softer tone to it,” Kalo said.
Hogs in the Iowa and southern Minnesota cash market were down $1.58 on Friday at $80.70/cwt, according to the USDA.
Commodity funds have built up sizable net long positions in CME lean hog, live cattle and feeder cattle futures, leaving all three markets prone to bouts of long liquidation.
CME live cattle futures closed mostly lower on Friday, pressured by lower cash cattle prices compared to a week ago and long liquidation.
“This market is looking for bullish news to hang their hat on, and didn’t find it this week,” Kalo said.
CME June live cattle futures settled down 0.325 cent at 115.05 cents/lb. after dipping to 114.65 cents, the contract’s lowest since Dec. 11. August live cattle futures closed down 0.275 cent at 112.65 cents/lb.
August feeder cattle fell 0.4 cent to end at 152.85 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.