Chicago | Reuters –– Chicago Mercantile Exchange lean hog futures tumbled to an 11-month low in a bear-spreading selloff linked to big U.S. hog supplies and declines in cash markets, traders said.
Live cattle futures also eased on spreading and worries beef packers might be hesitant to pay higher prices for cattle when supplies were abundant.
The U.S. hog herd was nearly record-large and pork packers were able to buy what they needed without bidding aggressively for the animals.
Hogs in the top cash market of Iowa and southern Minnesota fell $1.11 to an average of $55.88/cwt, according to the U.S. Department of Agriculture (all figures US$). The CME’s index of the cash hog market fell to a four-month low.
“It’s tough to find anything supportive for hogs, at least in the near term,” said Steiner Consulting Group analyst Altin Kalo. “The cash market keeps coming down and that’s what people are focused on.”
CME October lean hogs settled 2.125 cents lower at 59.45 cents/lb., a decline of more than three per cent. The contract finished just above its session low of 59.225 cents, which was its lowest level since Oct. 3, 2016.
Tuesday was the third of the five-day roll for investors tracking the Standard + Poor’s Goldman Sachs Commodity Index, in which traders rolled out of October and into December contracts.
CME October live cattle futures were down 0.925 cent at 106.275 cents/lb.; December was down 1.325 cents at 111.55 cents.
“There isn’t a push on the packer side to go out and chase cattle. Until that changes, the cattle market will bob around,” Kalo said.
CME October feeder cattle futures were down 0.2 cent at 149.15 cents/lb., easing slightly after reaching a roughly one-month high of 149.875 cents.
USDA in a monthly supply and demand report reduced its 2017 U.S. beef production estimate to 26.63 billion lbs., from 26.77 billion lbs. in August. U.S. pork production was estimated at 25.86 billion lbs. this year, up from a forecast of 25.82 billion lbs. last month.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.