Chicago | Reuters — Lean hog futures on the Chicago Mercantile Exchange fell more than four per cent on Monday, pressured by worries about Chinese demand for U.S. pork and expectations of a seasonal slide in wholesale ham prices, traders said.
The CME February lean hogs contract settled down 3.75 cents at 84.75 cents/lb. after dipping to 84.575 cents, the contract’s lowest since Oct. 17 (all figures US$).
Traders cited fears of waning demand for commodities due to strict COVID-19 curbs in China, the world’s largest pork consumer, as well as softening hog prices.
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“Hog prices in China have been dropping,” said Dennis Smith, a commodity broker analyst at Archer Financial Services. “That is giving the indication that China will not be in our market for a while yet.”
On the domestic front, some traders braced for a slide in wholesale meat prices as retailers finish their purchases of seasonal items such as hams ahead of the end-year holidays.
“It looks like Christmas demand has been met, and it’s normal for the hams to take a big dive when that demand is completed,” Smith said.
The U.S. Department of Agriculture quoted the U.S. wholesale pork carcass cutout value at $89.52 per hundredweight (cwt) on Monday afternoon, up $1.89 from Friday, but hams were down $2.67 at $94.64/cwt.
Commodity funds hold a net long position in CME lean hog and live cattle futures, the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report showed, leaving those markets prone to bouts of long liquidation.
Live cattle and feeder cattle futures ended lower on Monday, defying bullish fundamental factors such as firm cash cattle prices and a strong slaughter pace. USDA revised last week’s cattle slaughter to 596,000 head, up from its Friday estimate of 581,000 head and up from 568,000 head a year earlier.
CME benchmark February live cattle settled down 0.45 cent on Monday at 154.675 cents/lb. The spot December contract fell 0.5 cent at 152.575 cents/lb.
CME January feeder cattle finished down 1.425 cents at 176.875 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
