Chicago | Reuters — U.S. hog futures dropped to their lowest prices in four months on Wednesday under pressure from large supplies and low pork prices.
Farmers have ramped up hog production due to low prices for grains used for feed and as processing companies have built new plants to slaughter swine in recent years.
“We’re just pricing in record weekly production totals that are at burdensome levels,” said Terry Roggensack, founding principal of The Hightower Report.
Chicago Mercantile Exchange April lean hogs ended down 3.55 cents at 52.975 cents/lb. and set a contract low of 52.25 (all figures US$). That was the lowest price for any front-month contract since October 2018.
The market extended losses after dropping by its daily limit of three cents on Tuesday. The limit temporarily expanded to 4.5 cents on Wednesday and will revert back to three cents on Thursday.
“The main reason for the break was we’re running five to seven per cent above a year ago in slaughter,” Roggensack said. “We should be one to three per cent.”
In the cattle market, traders focused on cold, snowy weather in the U.S. Plains that is expected to slow weight gain in herds and disrupt the transportation of livestock to slaughterhouses.
Temperatures dropped below freezing in Montana and the Dakotas on Wednesday morning, while below-normal temperatures prevailed across the remainder of the nation’s mid-section, according to a weather report from the U.S. Department of Agriculture.
Cattle typically do not gain weight as quickly in cold weather because they consume feed to generate body heat.
“Demand is strong and winter weather is creating more complications at the feedlots,” said Kevin Van Trump, president of U.S. consultancy Farm Direction.
Chicago Mercantile Exchange February live cattle rose 0.45 cent to 128.325 cents/lb. April live cattle was up 0.75 cent at 129.2 cents/lb.
March feeder cattle futures gained 0.125 cent to 143.875 cents/lb.
Cash cattle traded at about $125/cwt in Kansas and Texas and $124/cwt in Nebraska at the end of last week, according to traders.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.