Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures consolidated on Friday as the market caught its breath after pulling back from contract highs reached last week.
Strong demand for U.S. pork from China recently supported hog futures, as China is battling the fatal pig disease African swine fever, which increased its need for meat imports.
However, hog futures weakened on Thursday after the U.S. Department of Agriculture reported strong weekly U.S. export sales. Some traders said the slump was disappointing and indicated the market may have run out of steam for the time being.
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“We may have actually peaked this hog market out for the near term,” said Brian Hoops, president of brokerage Midwest Market Solutions.
Most-active CME April lean hog futures ended down 0.125 cent at 87.175 cents/lb. on Friday (all figures US$). It set a life-of-contract high of 90.675 cents on Feb. 25.
Deferred lean hog futures settled slightly higher.
Vietnam and several other countries have relaxed import bans on German pork imposed after the discovery of African swine fever in Germany. But the relaxation does not include China, Germany’s largest customer for pork.
In the U.S. beef market, CME April live cattle futures edged up 0.475 cent to 119.025 cents/lb. The contract has pulled back since strong domestic and export demand for U.S. beef pushed the market to a life-of-contract high of 126.7 cents on Feb. 16.
Live cattle futures have pulled back from the recent high because they were too lofty compared to cash prices, according to traders.
April futures will likely struggle to rally again until cash cattle prices improve, Hoops said.
“The cash has not come up, so the futures came down,” Hoops said.
CME April feeder cattle futures settled 0.05 cent higher at 139.025 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
