CME update: consistent pork demand pushes futures to May 2019 high

US hog futures rose to their highest price since May 2019 on 9 October as domestic demand for pork remained strong.

12 October 2020, at 7:35am

Reuters reports that gains in the sine market extend a rally driven by rising cash prices for hogs and demand from consumers.

"Domestic demand has been faring better than we expected," said Arlan Suderman, chief commodities economist for US broker StoneX.

Chicago Mercantile Exchange October lean hogs advanced 0.775 cent to 78.125 cents per pound and touched its highest price since 28 May 2019. Most-active December hogs settled up 0.275 cents at 67.125 cents, near a nine-month high reached on 8 October.

The US Department of Agriculture, in a monthly supply and demand report, reduced its 2020 domestic pork production forecast, citing lower commercial hog slaughtering in the second half of the year and lighter carcass weights.

The 2020 and 2021 pork export forecasts were lowered from last month because of "weakness in global import demand," according to the USDA.

Some analysts said demand from China, the world's top pork consumer, was still supportive to the hog market. China needs to import more meat after suffering an outbreak of a fatal pig disease, African swine fever, over the past two years.

China's agriculture ministry on 9 October confirmed African swine fever in piglets illegally transported to the southwestern city of Chongqing, the first reported outbreak since 25 July.

"We're expecting a very robust export shipment season to close out the year, especially to China," Suderman said.

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