Chicago | Reuters – Chicago Mercantile Exchange lean hog futures set a contract high on Thursday as strong cash prices supported the market, analysts said.
After the trading session ended, the U.S. Department of Agriculture said in a quarterly report the nation’s inventory of hogs and pigs on September 1 was 74.5 million head, down 1.3 per cent from a year earlier. The decline surprised analysts who on average had predicted a 0.3 per cent increase.
The U.S. breeding inventory was 5.93 million head, down 1.8 per cent from last year, the USDA said. Analysts had expected a 0.5 per cent decline.
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“It says we’re looking at lower supplies,” said Doug Houghton, analyst with Brock Associates.
Before the USDA issued its report, CME October lean hogs LHV25 ended up 0.675 cent at 100.100 cents per pound and set a contract high of 100.800 cents. December hogs LHZ25 closed up 0.500 at 88.625 cents per pound.
“The report looks bullish across all of the contracts,” Houghton said. “The front months are still going to follow the cash prices. The back-end months, I would think this would definitely be supportive for those.”
In CME’s cattle markets, futures prices declined as the USDA said it was developing a plan to revitalize the decimated U.S. herd. The plan will not include payments to producers, Agriculture Secretary Brooke Rollins said.
U.S. cattle inventories declined to their lowest level in decades after a years-long drought reduced pasture lands available for grazing, pushing up beef prices for consumers.
Inventories have tightened further as the USDA has halted imports of Mexican cattle due to the spread of the livestock pest New World screwworm in Mexico. Rollins said Mexico has not adequately enacted protocols to control screwworm, after the parasite was recently found in Mexico less than 70 miles from the U.S. border.
CME December live cattle LCZ25 dropped 2.525 cents to 234.300 cents per pound. October feeder cattle FCV25 slid 5.575 cents to 354.050 cents per pound.
U.S. prices for choice cuts of boxed beef dropped by $5.42 to $371.97 per hundredweight and select cuts slid by $2.97 to $353.45 per hundredweight, according to the USDA. The decline added pressure on futures, traders said.
