CME update: US hog futures reach new highs on tight US supply

Lean hog futures on the Chicago Mercantile Exchange found life-of-contract highs for a second day on 26 March after the US Agriculture Department reported tight supplies in its quarterly hogs and pigs report after the close Thursday.

29 March 2021, at 10:44am

Reuters reports that CME April lean hogs settled up 1.125 cents at 100.800 cents per pound, after reaching a contract high of 101.975 cents, while most-active June hogs closed 2.275 cents higher at 105.600 cents per pound after reaching 105.850 cents.

The USDA's quarterly report noted a 2% drop in the US herd as of 1 March, compared with a year earlier, well below analyst expectations.

"The front-end (futures) months led, up on tighter supplies going into late spring and summer," said Doug Houghton, technical analyst at Brock Capital Management. "Farrowing intentions were down – it only looks like tighter supplies ahead."

The USDA also projected a 4% drop in sows birthing new piglets from June to August, compared with a year earlier.

Tight hog supplies have boosted the cash market as well, traders said.

"Packers look like they are having to compete for hogs for the first time in a long while," said Dan Norcini, independent livestock trader. "The cash market continues to be very strong."

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