CHICAGO, Oct 18 (Reuters) – Chicago Mercantile Exchange lean hog futures on Tuesday slumped for a third consecutive session, weakened by already ample supplies as Smithfield Foods’ East Coast plants return to full operations after being idled by Hurricane Matthew, traders said.
Most-actively traded December lean hogs finished down 0.475 cent per pound to 41.125 cents.
Monday and Tuesday’s combined hog slaughter totaled 881,000 head – 101,000 more than the same period a week ago, according to U.S. Department of Agriculture estimates.
“That’s an awful lot of pork tonnage coming onto the market. Pork demand is going to need to remain exceptional to absorb this wall of pork coming our way,” said independent livestock futures trader Dan Norcini.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Domestic pork demand held up fairly well as grocers feature product during October National Pork Month, said traders and Midwest hog merchants.
A trader said prices for slaughter-ready, or cash, hogs in the southeastern part of the country could suffer as packing plants in the region take delivery of animals that had been delayed by the storm.
Hog merchants forecast this Saturday’s hog slaughter at 280,000 head, which they said could increase depending on the availability of animals on the East Coast.
Last Saturday, packers processed 309,000 hogs, compared to 231,000 a week earlier when Smithfield closed its Tar Heel, N.C. plant as a safety precaution in advance of Hurricane Matthew.
Anticipation for steady to firmer prices for slaughter-ready, or cash, cattle by week’s end lifted CME live cattle contracts for a third consecutive session, said traders.
October closed 0.475 cent per pound higher at 97.750 cents, and most-actively traded December closed up 0.225 cent to 99.225 cents.
Healthy packer profits, firmer wholesale beef values and fewer cattle for sale than last week bode well for this week’s cash prices, said traders and analysts.
So far, cash cattle at small auction barns in the U.S. Plains changed hands at $96 to $100 per cwt, versus overall cash sales last week in the Plains at $97 to 98, an analyst said.
Average beef packer margins for Tuesday were a positive $147.20 per head, up from a positive $138.35 on Monday and up from a positive $130.40 a week ago, as calculated by HedgersEdge.com.
CME feeder cattle followed live cattle futures higher. October feeders ended up 0.325 cent per pound to 122.025 cents.
