Chicago | Reuters — Chicago Mercantile Exchange hog futures tumbled to contract lows on Thursday, as excess supplies and sluggish demand for U.S. pork fueled losses for a fifth consecutive session.
Weak prices for pigs and high production costs continue to make it unprofitable to raise hogs, leading some analysts to project that producers will reduce their operations.
The market will struggle to recover until consumer demand improves for U.S. pork, FuturesOne commodity broker Matt Wiegand said.
“Demand is poor,” he said.
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CME lean hogs for June delivery reached a contract low of 77.025 cents/lb. before ending down 2.15 cents at 77.65 cents/lb. (all figures US$). Most-active July hogs closed 3.575 cents lower at 77.25 cents/lb. and set a contract low of 77 cents/lb.
The contracts have dropped about 29 per cent this year.
“Hogs took major hits today,” CHS Hedging said in a note.
Weekly U.S. pork export sales were 29,200 tonnes for 2023 in the week ended May 18, down eight per cent from the previous week and 29 per cent from the prior four-week average, the U.S. Department of Agriculture said.
For beef, net sales of 18,300 tonnes for 2023 were up five per cent from the previous week and 15 per cent from the prior four-week average.
CME June live cattle futures settled up 1.2 cents at 167.3 cents/lb. The most-active August live cattle contract rose 0.65 cent, to 164.775 cents.
CME August feeder cattle gained 0.175 cent to finish at 234.7 cents/lb.
Cattle traders continue to focus on tight supplies after a drought prompted producers to reduce their herds.
Cash cattle traded from $180 to $182/cwt in Iowa and Nebraska this week, up from about $178/cwt last week, brokers said.
U.S. meatpackers may be largely finished buying cattle in the cash market this week, Wiegand said, ahead of the three-day U.S. Memorial Day weekend.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
