CME update: lean hog futures firm as cold storage supplies drop

US lean hog futures rose on 23 June following two sessions of declines.
calendar icon 24 June 2020
clock icon 3 minute read

Reuters reports that USDA data shows a larger-than-expected decline in cold storage stocks of pork, firming prices.

The USDA stocks report, released after the markets closed on 22 June, shows a record-large drop in US frozen pork inventories in May.

Frozen inventories plummeted last month due to outbreaks of COVID-19 among meat plant workers. This slowed production and made exporters draw from supplies in storage.

Chicago Mercantile Exchange (CME) July lean hogs gained 0.075 cent to 46.900 cents per pound, while actively traded August jumped 1.400 cents to 52.500 cents per pound.

"This is certainly a cold storage report reaction. Pork numbers were a record for any previous month and the beef numbers were the second largest decline of any previous month," said Rich Nelson, chief strategist with Allendale Inc.

Ample supplies of livestock following coronavirus-related supply-chain disruptions continue to hang over the market.

Hog traders are looking ahead to a quarterly USDA report on Thursday that is expected to show a 3.7 percent expansion of the US pig herd in the March-to-May quarter.

Traders are also monitoring US trade with China after White House trade adviser Peter Navarro on Monday 22 June walked back on his earlier remarks that the US-China trade pact was "over," stoking volatility in markets already rattled by the coronavirus pandemic.

Markets are also wary about requests by Chinese authorities to certify food import shipments to be free of coronavirus contamination. Although there is no evidence that the virus can be transmitted from food to people, at least three Brazilian meat processors have signed such declarations.

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