Lean hog futures fall, live cattle futures end lower - CME

Traders worry about sliding Chinese demand for pork
calendar icon 29 November 2022
clock icon 2 minute read

Lean hog futures on the Chicago Mercantile Exchange (CME) fell more than 4% on Monday, pressured by worries about Chinese demand for US pork and expectations of a seasonal slide in wholesale ham prices, Reuters reported, citing traders.

The CME February lean hogs contract settled down 3.750 cents at 84.750 cents per pound after dipping to 84.575 cents, the contract's lowest since Oct. 17.

Traders cited fears of waning demand for commodities due to strict COVID-19 curbs in China, the world's largest pork consumer, as well as softening hog prices.

"Hog prices in China have been dropping," said Dennis Smith, a commodity broker analyst at Archer Financial Services. "That is giving the indication that China will not be in our market for a while yet."

On the domestic front, some traders braced for a slide in wholesale meat prices as retailers finish their purchases of seasonal items such as hams ahead of the end-year holidays.

"It looks like Christmas demand has been met, and it's normal for the hams to take a big dive when that demand is completed," Smith said.

The US Department of Agriculture quoted the US wholesale pork carcass cutout value at $89.52 per hundredweight (cwt) on Monday afternoon, up $1.89 from Friday, but hams were down $2.67 at $94.64 per cwt.

Commodity funds hold a net long position in CME lean hog and live cattle futures, the Commodity Futures Trading Commission's weekly Commitments of Traders report showed, leaving those markets prone to bouts of long liquidation.

Live cattle and feeder cattle futures ended lower on Monday, defying bullish fundamental factors such as firm cash cattle prices and a strong slaughter pace. The USDA revised last week's cattle slaughter to 596,000 head, up from its Friday estimate of 581,000 head and up from 568,000 head a year earlier. 

CME benchmark February live cattle settled down 0.450 cent on Monday at 154.675 cents per pound. The spot December contract fell 0.500 cent at 152.575 cents per pound.

CME January feeder cattle finished down 1.425 cents at 176.875 cents per pound.

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