Chicago | Reuters — Chicago Mercantile Exchange hog futures rose 1.5 per cent on Friday to hit their highest since mid-October, extending a rally on technical buying.
Traders remained focused on the slaughter rate as COVID-19 disruptions have caused slowdowns at meat processors throughout the month.
“The industry still isn’t functioning normally, though the processing slowdown means a tighter pork pipeline currently and bigger picture we are trending into seasonally smaller hog supplies,” brokerage StoneX said in a note to clients.
Most actively traded February lean hogs rose 1.275 cents to 86.2 cents/lb. (all figures US$). The contract rose above the high end of its 20-day Bollinger range.
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On a continuous basis, the front-month contract hit its highest since Oct. 14 during the session.
Hog futures have risen for five sessions in a row, their longest streak of gains since June.
CME February live cattle futures dropped 0.4 cent to 137.925 cents/lb. March feeder cattle futures were down 1.65 cents at 163.3 cents/lb.
A U.S. Agriculture Department report on Friday afternoon showed that the amount of cattle on feed as of Jan. 1 stood at 101 per cent of the year-ago total. Analysts had been expecting 100 per cent.
Placements during December were also bigger than expected, coming in at 106 per cent of the year-earlier total, compared with market forecasts for 102.6 per cent. Marketings during the month were 100 per cent of December 2020, below forecasts for 100.8 per cent.
Meat processors slaughtered an estimated 445,000 hogs on Friday, down 12,000 from Thursday, USDA said. The cattle slaughter dropped by 2,000 to 114,000.
Profit margins for beef processors rose to $475.70 per head of cattle on Friday from $456.90 on Thursday, said HedgersEdge.com. Pork processors’ margins rose to $36.05 from $34.50 per head.
— Reporting for Reuters by Mark Weinraub in Chicago.
