Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures plunged more than three per cent on Thursday as disappointing export sales data triggered profit-taking following the market’s recent run to the highest in more than eight months, traders said.
Contracts from May to December closed down the daily three-cent limit, including actively traded June, which represents nearly a third of the market’s open interest.
The U.S. Department of Agriculture on Thursday reported net pork export sales at 21,468 tonnes in the week ended March 21, the lowest in at least a month.
The weekly USDA data included 999 tonnes in net cancellations by China. That was a shock to the market following recent speculation that the world’s top pork market would be boosting U.S. pork purchases to offset hog herd losses due to China’s severe African swine fever outbreak.
“We had a net cancellation today, not even a small purchase. That took the wind out of the sails right away,” said Rich Nelson, chief strategist with Allendale Inc.
“People are questioning when China might resume buying and they’re taking a lot of premium out of the market here,” he said.
CME April lean hogs ended down 2.45 cents at 78.875 cents/lb., while June hogs fell three cents, to 91.8 cents.
Trading limits will expand to 4.5 cents on Friday following the limit-down close, the CME said.
Data in the USDA quarterly hogs and pigs report, released after the close on Thursday, was largely in line with trade expectations.
USDA pegged the March 1 hog inventory 2.1 per cent above the same point a year earlier. The breeding inventory rose by 2.2 per cent while the market hog inventory was 2.1 per cent higher.
Future farrowing intentions were smaller than expected, suggesting hog producers may thin their herds following a five-year-long expansion, Nelson said. The data, however, is based on surveys taken before a recent surge in hog prices so the data may not reflect producer intentions today.
Live cattle futures ended narrowly mixed on Thursday, consolidating after three days of declines triggered by seasonally rising cattle supplies and weaker cash market prices.
April live cattle futures ended 0.275 cent higher at 126.525 cents/lb. while the actively traded June contract rose 0.025 cent to 119.625 cents.
April feeder cattle futures were 0.05 cent higher at 145.95 cents/lb. while May feeders were up 0.15 cent at 149.675.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.