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Lean hog futures climb, cattle strengthens - CME

26 January 2022

Traders concerned about tightening supply

Chicago Mercantile Exchange (CME) lean hog futures climbed to a new contract high on Tuesday on concerns about tightening US supplies, analysts said.

Nearby live cattle and feeder cattle futures also strengthened, reported Reuters

US cold storage data, issued after the markets closed on Monday, was supportive for hog and cattle futures, analysts said. Frozen pork supplies on 31 December were down 4% from a year earlier, while frozen beef supplies were down 6% on the year, the US Department of Agriculture (USDA) said.

Meat companies have struggled to rebuild pork inventories since the COVID-19 pandemic temporarily shut slaughterhouses in spring 2020, lowering production. The size of the US hog herd has also declined amid pig diseases.

"Pork supplies in the freezer remain tight," said Steiner Consulting Group in a daily livestock report.

CME April lean hogs finished up 1.925 cents at 97.250 cents per pound and set a contract high of 97.375 cents. The contract has gained 16% since hitting a three-week low on 11 January.

The gains widened the spread between futures and cash prices. The wholesale pork carcass cutout value fell by $3.20 to $92.46 per cwt on Tuesday, the USDA said.

Traders digested a California state court ruling that delayed enforcement for grocers and restaurants of a farm-animal welfare law known as Proposition 12 that required pigs to be raised with more space starting 1 January. 

Farm and meatpacking groups praised the court decision. However, California officials said US farmers that supply pork to the state will still be subject to enforcement of new square-footage requirements for hogs.

In the beef markets, CME April live cattle futures ended up 0.025 cents at 140.100 cents per pound. March feeder cattle futures ended down 1.400 cents at 159.850 cents per pound, after falling on Monday to their lowest price since November 12 at 158.225 cents.

Source: Reuters


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