4 February 2022

2 minute read

North America

Chicago Mercantile Exchange (CME) hog and cattle futures closed lower on Thursday, retreating as traders paused to book profits after the benchmark contracts in both markets climbed to life-of-contract highs.

CME April lean hogs settled down 0.750 cent at 98.375 cents per pound, easing after notching a contract high at 101.250 cents. The April contract has posted a higher close in 11 of the last 14 sessions.

"Generally the whole rally has been heavily based on the fact that we have tighter hog supplies this year, and pork demand has held up quite well so far," said Doug Houghton, analyst at Brock Capital Management. "Today this market just became a bit overdone," Houghton said.

Additional pressure likely stemmed from a drop in the daily hog slaughter after a major winter storm crossed the US midsection this week, threatening to back up supplies of market-ready hogs in the country.

The US Department of Agriculture (USDA) estimated Wednesday's hog kill at 424,000 head, down from 480,000 on Tuesday and around 475,000 a week ago.

Meanwhile, the USDA reported export sales of US pork in the latest week at 30,400 tonnes, with Mexico the top buyer at 20,700 tonnes. Beef sales totalled 20,100 tonnes, with Japan booking 11,800 tonnes.

CME cattle futures fell on technical selling and profit-taking, snapping a four-session rally fuelled in part by a USDA report on Monday that showed the US beef cow herd was the smallest in seven years.

CME April live cattle ended down 0.150 cent at 146.750 cents per pound, falling after setting a contract high at 147.275 cents. March feeder cattle ended down 0.150 cent at 166.725 cents per pound.

Market-ready cattle traded in the southern Plains cash market mostly at $139 to $140 per hundredweight, up $2 to $3 from last week.

Source: Reuters