CME update: hog futures see benefit from rising pork demand
US lean hog futures rose on 13 July on signs of improving demand for pork and optimism about Chinese export demand.
14 July 2020
3 minute read
By: Reuters reports that China’s renewed outbreak of African swine fever has increased demand for US pork products.
Chicago Mercantile Exchange (CME) August lean hog futures settled up 1.400 cents at 51.275 cents per pound, after reaching 51.825 cents, the contract's highest since 25 June.
The US pork cutout, an indication of wholesale prices, was up $3.40 at midmorning at $72.35 per cwt, according to the US Department of Agriculture, a bullish signal for traders. However, the USDA updated the cutout later on Monday 13 July, after the CME close, to $67.52 per cwt, a net decline of $1.43 compared to Friday 10 July.
Still, prices for certain cuts such as hams and bellies have risen over the last week.
"Some of these big users probably have determined that ham prices have bottomed out," said Dennis Smith, commodity broker for Archer Financial Services in Chicago.
Meanwhile, outbreaks of African swine fever are surging in parts of China, home to the world's largest hog herd, following heavy rains. Those outbreaks could pose a setback for Beijing's goal of replenishing pork supplies.
"We are hearing that the export market is getting stronger, and it's being driven by China, and also Mexico coming in," Smith said.
