Chicago | Reuters — Chicago Mercantile Exchange hog futures dropped to contract lows again on Friday, as poor demand for U.S. pork continued to depress prices.
The losses heap more pain on producers who have struggled with weak prices for pigs and high costs for expenses such as feed and labour.
“Producers are losing their rear ends,” said Dan Norcini, an independent livestock trader.
CME lean hogs for June delivery ended down 1.575 cents at 76.075 cents/lb., after touching a contract low of 75.45 cents/lb. (all figures US$).
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Most-active July hogs closed 2.475 cents weaker at 74.775 cents/lb. and set a contract low of 74.025 cents/lb. The contract lost about 10 per cent this week and is down about 32 per cent this year.
Markets will be closed on Monday, as consumers celebrate the Memorial Day holiday in the U.S., typically the kickoff to the summer grilling season.
Retail pork prices remain too high to increase demand from consumers, Norcini said. Small-time and independent farmers may quit the industry unless demand improves, he said.
“Grocers must start to feature pork aggressively or we are not going to have anything left except the big boys,” Norcini said.
Some major companies are already reducing operations in North America.
One of Canada’s biggest pork processors, Olymel, said Friday it will slash its western sow herd by 30 per cent to 40,000 sows in production.
Olymel said the closure of sow farms will result in a net reduction of about 200,000 market hogs annually to its slaughter plant at Red Deer, Alta., from company-owned farms. The impact will be felt in 2024 at the earliest.
In other markets, most-active August live cattle futures rose 0.4 cent, to 165.175 cents.
August feeder cattle futures fell 0.775 cent to finish at 233.925 cents/lb. A rally in corn futures pressured feeder cattle by signaling that costs for livestock feed may rise further, traders said.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
