Chicago | Reuters — U.S. lean hog futures fell sharply on Tuesday as a powerful hurricane roared toward the U.S. East Coast, threatening hog production in the Carolinas, home to some of the country’s largest packing plants.
Pork producer Smithfield Foods said it will be shuttering two of its hog plants in North Carolina on Thursday and Friday, including its massive Tar Heel plant that can process 35,000 hogs a day.
Hurricane Florence, a Category 4 storm, is expected to hit the North Carolina coast on Friday, according to the latest forecasts.
“Any time you’re cutting off slaughter at such a big plant, that poses a problem for the supply chain. The futures market acted accordingly,” said Craig VanDyke, analyst with Top Third Ag Marketing.
Uncertainty about the long-term impact of swine diseases in Asia and Europe triggered high volatility in lean hog futures.
Underscoring recent volatility in the market, after Tuesday’s close, the CME Group said it would raise margins to trade CME lean hog futures, effective after the close on Sept. 12.
China has been battling African swine fever in recent weeks and Japan this month reported its first swine fever — a different strain than China’s — in 26 years. African swine fever has also been found in Europe.
Speculation that U.S. hog and pork exports could rise as a result of hog herd culling in affected countries limited declines in deferred futures contracts.
Chicago Mercantile Exchange October lean hogs ended down 1.475 cents/lb. at 54.475 cents (all figures US$). December fell 1.6 cents, to 54.1 cents.
Live cattle futures dropped on technical selling, reversing the prior day’s gains that had taken prices to three-week highs.
CME October live cattle fell 0.85 cent/lb. to 109.3 cents, breaking below chart support at its 200-day moving average. December cattle ended down 0.5 cent, at 113.925 cents.
October feeder cattle ended down 0.225 cent, at 152.450 cents/lb. November futures fell 0.45 cent, to 152.425 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.