CME update: lean hog futures rise on increased demand and firm cash prices

US hog futures maintained their advances on 7 October and the front-month contract reached its highest price in nearly a year due to strength in the cash market.

8 October 2020, at 9:05am

Reuters reports that steady pork demand can underpinned cash prices in the face of large hog supplies.

The US pork cut-out, an indication of wholesale pork prices, rose on Wednesday afternoon by $2.63 to $95.18 cents per cwt, according to the US Department of Agriculture.

Chicago Mercantile Exchange October lean hogs advanced 0.550 cent to close at 76.875 cents per pound and reached their highest price since November 2019. The contract has soared 55 percent since the start of August 2020.

Most-active December hogs settled up 0.700 cent at 64.575 cents and touched their highest price since 25 September. The contract is up 28 percent since the start of August.

Limiting gains was an increase in hog weights, analysts said. The average weight in the week ended 3 October was 283.4 pounds, up from 281.8 pounds a week ago and 282.5 pounds a year earlier, according to the USDA.

Traders on Thursday 8 October will assess weekly USDA export sales data for Chinese demand. A fatal pig disease has created a domestic meat deficit in China, the world's top pork consumer, and increased the need for imports.

China blocked German pork after the disease was found in wild boars in eastern Germany, and one more case was confirmed there on Wednesday 7 October. The United States, Spain and other suppliers are expected to increase sales to China to compensate for Germany's absence from the market.

Read more about this story here.