Chicago | Reuters — Chicago Mercantile Exchange live cattle and lean hog futures fell on Friday as sluggish slaughter rates continue to drag on prices, traders said.
“They’re both facing the same fundamental music – this slaughter disruption due to weather, labour tightness and COVID,” said Dennis Smith, commodity broker at Archer Financial.
CME February live cattle futures settled down 0.025 cents at 137.325 cents/lb., ending the week down 2.375 cents, a 1.7 per cent drop.
CME March feeder cattle futures lost 0.6 cents to 166.675 cents/lb., ending the week down 3.275 cents, a 1.93 per cent weekly loss.
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With just 112,000 head of cattle slaughtered on Friday, processers ended the week at 562,000 head processed, 24,000 head short of the same week a year ago.
Tighter processing has supported wholesale beef prices, with choice cuts gaining $3.26, to $271.82/cwt, while select cuts added 46 cents, to $261.10, according to the U.S. Department of Agriculture.
Processors are offering firmer cash prices for market-ready cattle, with Nebraska cash trade topping at $141/cwt, while southern Plains cattle traded closer to $138/cwt.
Lean hog futures, while suffering from similarly soft slaughter capacity, were supported much of the week as smaller live hog inventories eased pressure on processors, a trend that’s expected to continue into the spring.
“The kill is projected to be down five to six per cent from a year ago in the first quarter,” Smith said. “That’s going to help these guys deal with the labour issues.”
CME February hogs dropped 3.3 cents to 79.65 cents/lb., despite back-month contracts finding life-of-contract highs before turning lower.
The Lean Hog Index, a two-day weighted average of cash hog prices, fell 30 cents, to $73.57/cwt.
For the week, hog slaughter of 2.316 million head was behind year-ago levels by 129,000 head, USDA said.
Meanwhile, the deadly hog disease African swine fever has been found in a wild boar in Italy’s Piedmont region, the regional government said in a statement. Markets seemed little moved by the news Friday afternoon.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.
