US lean hog futures slump this week
US lean hog futures have slumped, pressured by abundant near-term hog supplies and concerns that US pork export demand would not be large enough to absorb the expected surplus of meat produced.
Hopes for a jump in Chinese demand for US pork have supported hog futures at times in recent months. China's demand for imported pork has risen this year as African swine fever has decimated its domestic herd.
But US shipments to the world's top pork consuming country have been largely disappointing and steep retaliatory tariffs on US shipments remain in place, says Reuters.
Meanwhile, massive US hog supplies have weighed down cash hog prices, which are at a large discount to futures.
The average cash hog price in the closely followed Iowa and southern Minnesota market were down $1.04 per cwt on Tuesday at $56.35 per cwt.
Chicago Mercantile Exchange (CME) December lean hog futures, the most active contract, settled down 2.325 cents at 65.500 cents per pound.
"We have questions about the demand, while at the same time the supply looks ridiculously large," said Rich Nelson, chief strategist with Allendale Inc.
We see a 4.5 percent increase in fourth-quarter production. That's an extra 1.1 billion pounds shoved onto this market. Any concerns about China not buying means we've got some mis-pricing in these December futures.
Rich Nelson, chief strategist with Allendale Inc
Cold storage data released by the US Department of Agriculture after the close appeared supportive to both hogs and cattle due to declines in beef and pork stocks in September, normally a stock-building month.
