CME: Hog Futures Bounce Back from the Lows
US - Livestock futures closed last week on a somewhat upbeat note as cattle and hog futures were generally higher on the day, write Steve Meyer and Len Steiner.
As the charts below show, however, nearby live cattle futures remain mired in a bearish trend while lean hogs have bounced back from the lows established back in the summer and have made some notable progress, partly due to reportedly good export sales but more so because US domestic pork sales have not been impacted by the H1N1 flu outbreak as much as previously thought.
Cattle slaughter for the week drifted lower compared to the week before, largely due to a light kill on Wednesday. Total cattle slaughter was reported to be 625,000 head, 0.64 per cent lower than the week before but 0.53 per cent higher than year ago levels. Fed cattle slaughter for the week was estimated to be 481,000 head, 1.69 per cent higher than the comparable period a year ago.
Cow and bull slaughter, on the other hand, was estimated to be 144,000 head, 1.4 per cent lower than year ago levels. Dressed weights were reported to be sharply lower at 791 pounds, compared to 797 pounds the week before. The number is preliminary so it may be revised in the coming weeks. Seasonally, however, weights tend to drift lower into December so the decline is not all that unusual.
Hog slaughter for the week was reported to be 2.290 million head, 0.52 per cent lower than the week before and now 1.31 per cent lower than year ago levels. As the 1 September inventory report indicated, hog slaughter in Q4 should be below year ago levels and so far that has been generally the case. It appears that the improvement in out-front hog prices also has provided some support to the sow market. Sow prices have showed a notable improvement in recent weeks although they remain below year ago levels.
Sow slaughter also has slowed down and for the week ending Oct 31 (reported with a two week lag) sow slaughter was noted to be 65,200 head, 1.08 per cent lower than the week before and 2.06 per cent lower than year ago levels. As for broiler supplies, the main competitor to beef and pork, producers continue to hold the line on lower production levels. Current slaughter remains below year ago, as do egg sets and chick placements, which were down 1.6 per cent and 1.03 per cent respectively compared to year ago.
