US lean hog futures take a tumble

Chicago Mercantile Exchange lean hog futures fell more than 2 percent on Friday on long liquidation and slower-than-expected export demand for US pork supplies.
calendar icon 17 June 2019
clock icon 3 minute read

Traders have been anticipating a jump in US pork exports this year as African swine fever, a deadly hog disease, ravages China's massive hog herd. But so far, shipments of US pork have not been as large as some had hoped.

The US Department of Agriculture reported export sales of US 2019 pork in the week to 6 June at 23,100 tonnes, including 2,400 tonnes to China.

"The African swine fever situation in China seems to be a dud," said Dan Norcini, an independent livestock trader. "Granted, China has been buying pork, but the shipments are slow... It's just not coming out of the country very quickly," Norcini said.

CME July lean hog futures ended down 2.025 cents at 81.350 cents per pound and August hogs fell 2.200 cents at 80.625 cents per pound after dipping to 79.825, its lowest since 8 March.

"In the short term, the technical support levels on the charts are breaking down, and that has got the hedge funds selling," Norcini said.

After the CME closed, the US Commodity Futures Trading Commission said managed funds cut their net long position in CME lean hog futures to 33,074 contracts in the week to 11 June, down about 6,000 lots, their third straight weekly reduction.

"Guys got long on the African swine fever story, and the cash (market) has not followed it," said John Payne, senior market analyst at Daniels Trading.

CME live cattle futures fell for a third straight session on sluggish domestic beef demand in the thick of summer grilling season, coupled with rising costs for corn, the top feed source for cattle.

CME most-active August live cattle settled down 0.450 cent at 104.275 cents per pound. CME August feeder cattle ended down 0.700 cent at 135.525 cents per pound.

"We had Mothers Day, Memorial Day, we have Fathers Day coming up, we've got 4 July - those tend to be good demand periods for meat, and we are just not seeing it. I don't know if (poor) weather had something to do with it," Norcini said.

The US Department of Agriculture (USDA) quoted the choice boxed beef cutout on Friday at $222.23 per cwt, up $0.13 from Thursday and nearly unchanged from a week ago, while the select cutout fell $1.95 to $202.76, down from $206.92 a week earlier.

Meanwhile, Chicago Board of Trade corn futures set a five-year high Friday on uncertain US crop prospects after widespread planting delays this spring.

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