Chicago | Reuters — Chicago Mercantile Exchange lean hog futures stepped back on Monday but remained near recent highs as demand optimism persists, supported by tighter hog supplies.
As the U.S. economy rebuilds and meat demand at restaurants increases into the summer, analysts expect supplies to remain tight for several months.
“The deferred contracts should be overpriced,” said Kirk Dawson, commodity broker at Allendale. “You’ve got $100 hogs out to July.”
April lean hogs closed up 0.8 cent at 95.05 cents/lb., while the most-active June contract trimmed 1.125 cents, to 99.475 cents/lb. (all figures US$).
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Hog slaughter increased to 494,000 head on Monday, up nearly 2.5 per cent from a week ago but still one per cent lower than a year ago.
On Monday, the U.S. Department of Agriculture reported frozen pork belly stocks rose to 37.974 million lbs. as of Feb. 28, up 22 per cent from the previous month but down 49 per cent from a year ago.
Meanwhile, CME live cattle futures firmed, following boxed beef prices higher.
Choice beef cuts rose 96 cents, to $230.95/cwt, while select cuts added $3.10, to $223.05/cwt, according to the U.S. Department of Agriculture.
CME April live cattle gained 0.375 cent to settle at 118.775 cents/lb., while actively traded June futures added 0.25 cent, to 118.925 cents. May feeder cattle ended 0.425 cent higher at 145.1 cents/lb.
“You’re starting to see some tighter numbers on cattle, moving forward,” said Dawson. “The packers are getting better at moving through what we’ve got as well.”
Daily cattle slaughter increased to 116,000 head, an 8.4 per cent increase from a week prior, but still 1,000 head less than the same time a year ago.
USDA on Friday reported a slight increase of on-feed supplies at 102 per cent versus a year ago, though February marketings and placements were both at 98 per cent of a year ago, implying tighter supplies near-term.
Frozen beef stocks fell to 510.896 million lbs., down two per cent from a month earlier but up three per cent from a year ago, according to USDA.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.
