Chicago | Reuters — U.S. lean hog futures dipped on Tuesday, as questions continued to grow about whether pork export demand from China will surge and eat through massive domestic stockpiles, traders said.
Meanwhile, cattle futures rose as the cash market showed hints of increased demand from packers hungry to supply grocery stores and restaurants that are slowly reopening across the United States.
McDonald’s said on Tuesday that demand improved significantly from April to May, as many of its restaurants began serving diners, especially in the U.S.
Adding to that is traders’ expectation that the U.S. Department of Agriculture’s Cattle on Feed report on Friday is expected to show lower placements, and “we’re starting to see the market put a floor under cattle futures,” said Karl Setzer, commodity risk analyst for AgriVisor.
Chicago Mercantile Exchange August live cattle settled up 0.775 cent at 96.775 cents/lb. (all figures US$). August feeder cattle futures settled up 1.7 cents at 132.875 cents/lb.
In the pork market, CME July lean hog futures, the most actively traded contract, settled down 2.625 cents to 49.65 cents/lb., while August futures settled down 2.25 cents to 53.025 cents.
Monday’s hog kill continued to improve, with USDA estimating that packers slaughtered an estimated 458,000 head — up from 444,000 head a week earlier — but was still down nearly 3.6 per cent over last year.
“We’re slaughtering a lot of hogs,” Setzer said. “We are simply oversupplied with pork.”
While China is shuttering some of its markets due to the coronavirus pandemic, traders say the uncertainty about whether that will lead to more U.S. pork exports continues to weigh on futures.
China will auction 10,000 tonnes of frozen pork from state reserves on June 18, the China Merchandise Reserve Management Center said on Tuesday.
— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago.