Chicago | Reuters — Chicago Mercantile Exchange lean hog futures sank by the maximum daily trading limit on Thursday on rumours about a potential outbreak of a fatal pig disease which the U.S. government later said were untrue.
Unsubstantiated chatter about a U.S. case of African swine fever swirled in the market, but the U.S. Department of Agriculture told Reuters it was a rumour and the agency had not heard anything about even a suspected case.
CME April lean hogs finished down 4.3 cents at 79.45 cents/lb. and set their lowest price since October 2021 (all figures US$). The nearby contract has dropped nine per cent from its closing price on Friday.
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June hogs dropped by the daily limit of 4.75 cents, to 93.475 cents/lb. and hit their lowest price since January 2022. The daily trading limit will temporarily expand to seven cents on Friday, according to exchange operator CME Group.
The losses were a “total technical meltdown,” said Dennis Smith, commodity broker analyst at Archer Financial Services.
“There’s no explanation for the charts coming totally unglued,” he said.
Concerns about reduced demand for U.S. hams from Mexico, a top market for U.S. pork, loomed over the hog market due to strength in the U.S. dollar, traders said.
Mexico’s peso has been volatile in recent days, sliding around three per cent against its U.S. counterpart in the last week as traders flocked to the safe-haven dollar.
Pork cutout values for hams slid by $6, to $76.13 per hundredweight (cwt), after tumbling by $6.34 on Wednesday, the U.S. Department of Agriculture said. The pork carcass cutout fell by $1.89, to $84.49/cwt.
In the cattle markets, spillover support from rising equities helped support a rebound in futures prices, traders said.
CME April live cattle ended 0.8 cent higher at 162.35 cents/lb. April feeder cattle finished 1.9 cents higher at 195.15 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
