Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rose in deferred contracts on Friday on U.S. producers’ plans for fewer sows to farrow, analysts said.
Producers intend to have 2.93 million sows farrow, or give birth, from March to May, down one per cent from actual farrowings a year earlier, the U.S. Department of Agriculture said in a report issued after the market closed on Thursday. Intended farrowings for June to August are down three per cent at 2.97 million sows, the government said.
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The intentions surprised analysts who expected to see slight increases and later questioned whether the outlook will prove accurate. The nation’s inventory of breeding hogs as of March 1 was up slightly from last year and in line with analysts’ expectations.
“I don’t think we’re getting much information that’s useful from those farrowing intentions because they just don’t fit,” said Steve Meyer, lead economist for Partners for Production Agriculture.
U.S. producers have lost money in recent months due to low hog prices and elevated costs for feed, raising questions about whether some may reduce their operations.
If hog prices do not improve this summer, the farrowing intentions could come to fruition, said Katelyn McCullock, director of the Livestock Marketing Information Center.
“We have switched from cautious optimism among producers last year, especially through the spring and summer of last year, to a more pessimistic outlook for the future,” said Altin Kalo, Steiner Consulting Group economist.
Most-active CME June lean hog futures ended up 0.025 cent at 91.625 cents/lb., while July hogs rose 0.45 cent, to 94.025 cents/lb. (all figures US$). Front-month April hogs slid 1.2 cents to close at 75.25 cents/lb. and reached a contract low of 75 cents/lb.
In the cattle market, strong cash prices continued to support futures, traders said.
CME June live cattle advanced 1.125 cents to 162.125 cents/lb. and set a contract high of 162.175 cents/lb. May feeders rose 0.8 cent, to 205.25 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
