Chicago | Reuters — CME’s nearby lean hog futures firmed on Tuesday, incentivizing producers to sell market-ready hogs rather than hold them for premiums later in the summer, analysts said.
High futures prices “may have encouraged producers to take a little more risk,” said Altin Kalo, economist at Steiner Consulting Group. “When you’ve got such a big premium in June, and it’s mid-month in April, maybe you can hold on to some of those hogs and price them off the June contract.”
However, now that deferred month July prices are below June prices, farmers were looking to sell, he said.
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Benchmark June lean hogs firmed 0.275 cents, to 101.575 cents/lb. July hogs fell 1.225 cents, to 102.975 cents/lb. June hogs have fallen 15.79 per cent since March 31.
Producers have been holding hogs longer, Kalo said, in order to add weight and improve profits.
“The weights for packer-owned hogs are especially high, even compared to the COVID backups that caused weights to explode,” he said.
CME’s lean hog index, a two-day weighted average of live hog prices, added 18 cents, to $101.09/cwt.
Meanwhile, CME’s live cattle futures eased, pressured by outside markets and concerns about consumer demand.
“For some grocery stores, traffic numbers are way down. I think that’s something that is a concern – consumers trading down and not focusing on meat as much as before,” said Kalo.
Wholesale boxed beef prices were mixed for a second day, with choice cuts adding $3.85, to $262.86/cwt, while select cuts eased $1.93, to $243.13/cwt, according to the U.S. Department of Agriculture.
CME June live cattle futures settled 1.15 cents lower at 132.4 cents/lb. and August feeder cattle lost 2.375 cents, to 171.85 cents/lb.
Packers have maintained a strong pace, slaughtering 125,000 head of cattle on Tuesday, up 6,000 from the same time a year ago, while hog slaughter eased slightly versus 2021 to 480,000 head, USDA said.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.
