CHICAGO — Lean hog futures on the Chicago Mercantile Exchange fell sharply on Monday, with the benchmark October contract down its daily limit on worries about a seasonal increase in hog supplies and uncertain demand for U.S. pork, analysts said.
CME October hog futures settled down 3 cents at 84.600 cents per pound, the contract’s lowest since July 9, and December hogs fell 2.975 cents to end at 78.775 cents. Daily limits for Tuesday’s trade will widen to 4.5 cents, the exchange said.
Worries about export demand for U.S. pork, especially from China, hung over the market. China’s meat imports totaled 854,000 tonnes in July, down 14.4% from the same month a year earlier, customs data showed on Saturday, as weak domestic pork prices weighed on demand for imports.
Domestic pork prices in China have plunged this year due to imported supplies and increased Chinese production after African swine fever decimated herds.
“Are they (China) going to continue to be a big buyer here, if they are trying to support their own hog market?” asked Don Roose, president of Iowa-based U.S. Commodities.
U.S. cash hog prices are softening, with the slaughter pace expected to increase in the coming weeks, Roose said.
Nonetheless, wholesale pork prices firmed on Monday. The U.S. Department of Agriculture quoted the pork carcass cutout at $124.24 per hundredweight, up 57 cents from Friday, but down from last week’s high of $128.71.
CME cattle futures closed lower, following broad declines in commodities including crude oil, gold and grains, as the dollar firmed. Commodity funds hold a net long position in CME live cattle and lean hog futures, leaving both markets vulnerable to bouts of long liquidation.
Benchmark CME October live cattle futures settled down 0.400 cent at 127.475 cents per pound, while September feeder cattle fell 0.125 cents to close at 163.200 cents per pound.
Cattle futures were underpinned, however, by rising wholesale beef prices. Choice cuts rose another $3.54 on Monday to $299.80 per cwt and select cuts rose $3.72 to $280.81 per cwt, according to the USDA.
“Beef demand is strong and (packer) margins are huge, and it feels like the cash (cattle market) has a steady-to-higher bias,” Roose said.