May 5, 2021

 

CME lean hog futures maintain contract highs on tight supplies, cattle futures down

 


Lean hog futures on the Chicago Mercantile Exchange (CME) extend its contract highs for the third day in a row thanks to tight supplies of pork and a strong cash market, Reuters reported.

 

High pork demand has pushed the market upwards, as analysts said meat processors are paying up to purchase swine from suppliers.

 

The pork cutout value from the United States Department of Agriculture (USDA) has increased, reflecting the rising pork demand. However, the cutout dropped US$0.48 to US$111.18 per cwt for carcasses on May 4.

 

Rich Nelson, chief market strategist for Illinois-based broker Allendale, said swine supplies remain limited compared to cattle.

 

June lean hog futures, the most active CME contract, reached 113.800 per pound. This is a new contract high. It settled at 113.550 cents per pound. This year, the contract gained 37%.

 

July lean hog futures reached a contract high of 113.650 cents per pound before ending at 113.425 cents, reaching a contract high for a third day in a row.

 

Nelson said meatpackers are slaughtering swine at a steady pace when it would normally be on the decline during this time of the year.

 

According to USDA data, meatpackers processed about 487,000 swine compared to 486,000 swine last week. 121,000 cattle were slaughtered, unchanged from last week.

 

June live cattle futures on the CME dropped 2.275 cents to 113.025 cents per pound. August live cattle futures also dropped 3.625 cents to 143.175 cents per pound.

 

Trader said demand for US beef domestically and for export remains healthy. Nelseon said the high beef demand is creating a disconnect between cash cattle and prices for wholesale beef.

 

USDA data showed choice beef cutouts climbed US$1.92 per cwt to US$301.22. Select cuts are also up, by US$0.12 to US$283.91.

 

- Reuters