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LIVESTOCK-CME December hogs ease; U.S. hog herd shrinks

By Christopher Walljasper

CHICAGO, Sept 29 (Reuters) - Benchmark December lean hog futures on the Chicago Mercantile Exchange eased on Thursday ahead of the U.S. Agriculture Department's quarterly hog and pigs report, released after the market closed.

CME October hogs firmed 0.750 cent at 89.450 cents per lb, but most-active December hogs fell 0.100 cent to 75.725 cents per lb.

The U.S. hog herd shrank by one percent as of Sept. 1, according to the USDA, a larger-than-expected drop compared to analysts surveyed by Reuters.

Hogs kept for breeding were 99% versus a year earlier, and versus analyst expectations of 99.6%, indicating producers are not rebuilding herds as fast as anticipated.

"We are seeing contraction in the numbers overall," said Dan Norcini, an independent livestock market analyst, noting that high feed prices and demand uncertainty have muted producer expansion.

The CME's Lean Hog Index, a two-day weighted average of cash hog trade, lost 81 cents to 95.60 per cwt., its lowest since Feb. 18, 2022.

Pork exports for the week ended Sept. 22 were 34,300 tonnes, primarily to Mexico.

CME live cattle futures firmed on Thursday on strong cash cattle demand, rebounding after six sessions of decline on fears over domestic demand.

CME October live cattle added 1.075 cents to 144.125 cents per lb, while the most-active December contract firmed 1.500 cents to 147.775 cents.

CME November feeder cattle firmed 2.550 cents to 177.825 cents per lb.

In the cash market, cash cattle trade was active and firmer this week in the northern U.S. plains, trading up to $146 per cwt while southern U.S. Plains cattle traded at $143 per cwt.

Tight live cattle supplies underpin the market, Norcini said, noting that broader economic concerns could limit consumer activity.

"The big 'if' is how the demand side will hold up if economic conditions continue to worsen," he said.

Farmers in Florida rushed to reach their cattle on Thursday after trees downed by Hurricane Ian broke fences used to contain the animals and rain from the fierce storm flooded fields used for grazing. The state has more than 1.6 million cattle, about 2% of the U.S. herd, the U.S. Department of Agriculture said. Beef exports last week reached 21,500 tonnes, primarily to South Korea and China, the USDA said. (Reporting by Christopher Walljasper; Editing by Shailesh Kuber)

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