US hog, cattle futures climb - CME

Signs of decelerating US inflation are driving prices
calendar icon 11 August 2022
clock icon 2 minute read

Chicago Mercantile Exchange (CME) lean hog futures rose on Wednesday, with the October contract hitting a life-of-contract high on brisk pork demand and broad strength in commodities on signs of decelerating US inflation, reported Reuters, citing traders.

Livestock and other commodities rose along with Wall Street equity markets as lower-than-expected US inflation data drove investors into riskier assets.

"There was a general theme of buying commodities today," said Dan Norcini, an independent livestock trader.

CME August lean hogs settled up 0.050 cent at 122.250 cents per lb while benchmark October jumped 1.250 cents to end at 100.850 cents, after reaching a contract top at 101 cents.

Traders see the October hogs contract as under-priced relative to the August, which expires next week, given firm wholesale pork prices and persistent strength in the cash hog market.

"The October is at a huge discount to the August. Some traders look at that and say, if the product (wholesale pork) is holding up as well as it is, then October is too cheap," Norcini said.

Wholesale pork prices have inched lower in recent days but remain near their highs for 2022. The US Department of Agriculture priced pork carcasses at $123.67 per hundredweight (cwt) on Wednesday afternoon, down 18 cents from Tuesday and down from $131.02 on Aug. 2, a 13-1/2 month top.

"Prices are weakening but they are not falling apart," Norcini said.

In cattle markets, CME futures rose on speculative buying and optimism about rising cash prices for market-ready cattle. Fat cattle traded in Kansas at $139 per cwt, traders said, up $3 from last week, a possible sign of tightening cattle supplies in southern Plains feedlots.

CME August live cattle futures settled up 1.225 cents at 139.200 cents per lb, while most-active October rose 1.300 cents at 144.475 cents. September feeder cattle futures finished up 2.500 cents at 185.000 cents per lb.

Cattle supplies are expected to tighten later this year and into next year and beef production in the fourth quarter is forecast to be down sharply from a year earlier.

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