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CME update: lean hog futures weaken as corn prices surge

US lean hog futures ended lower on 10 November as skyrocketing corn prices signalled that feed costs will increase.

11 November 2020, at 8:52am

Reuters reports that rising crop prices hung over the markets after a monthly USDA report lowered the estimated US corn and soybean harvest – saying that crop demand will increase.

The adjustments pushed corn futures to their highest prices since July 2019, while soybeans touched their highest prices since July 2016.

Pork producers could be less willing to pay high prices for the animals if they are facing increased feed costs, said Arlan Suderman, chief commodities economist for broker StoneX.

"When you look at corn prices going up, that really puts a squeeze on feeding margins," he said.

December lean hog futures slipped 0.475 cent to 65.125 cents per pound.

Losses were a turnaround after prices climbed on Monday 9 November when hopes for a COVID-19 vaccine rallied commodity and equity markets.

The USDA, in its report on 10 November, raised its estimates for 2020 US pork production and imports and reduced its forecast for pork exports.

Traders are keeping a close eye on US pork shipments to China, the world's top pork consumer, where a fatal pig disease has decimated hog herds over the past two years.

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