July 13, 2021
Hog futures rise as US trims pork production estimates
Chicago Mercantile Exchange (CME) lean hog futures jumped on July 12 as the United States Department of Agriculture reduced its domestic pork production estimates for this year and 2022.
The USDA cut its production estimates due to reduced expectations for commercial hog slaughtering in the second half of the year, according to a monthly supply and demand report. The country is now expected to produce 28.12 billion pounds of pork in 2022, down 1.5% from the USDA's forecast in June.
Pork import and export forecasts for 2021 and 2022 were left unchanged.
However, a separate USDA report on July 9 showed strong demand for US pork from buyers in China, the world's biggest pork consumer. US pork export sales to China in the week ended July 1 were 16,299 tonnes, the highest since March, according to government data.
"That was very encouraging," said Arlan Suderman, chief commodities economist for broker StoneX.
CME lean hog futures for August delivery ended 2.500 cents stronger at 104.075 cents per pound and touched their highest price since July 1.
The supply of US hogs to be slaughtered into pork has tightened after some farmers euthanised animals last year when COVID-19 outbreaks temporarily closed meat plants, removing markets for livestock. This year, porcine reproductive and respiratory syndrome affected herds.
In a July 12 report, the USDA said data on hog supplies last month "indicated producers expect to farrow fewer sows in the second half of 2021 which, when coupled with slower forecast growth in pigs per litter, will tighten supplies of market-ready hogs in 2022 relative to last month."
In the beef market, feeder cattle futures dropped as costs increased for grain used for livestock feed, analysts said.
CME August feeder cattle closed down 1.025 cents at 158.150 cents per pound. August live cattle futures ended up 0.600 cent at 119.825 cents per pound.