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LIVESTOCK-U.S. hog futures top five-week high on China demand expectations

By Tom Polansek

CHICAGO, July 19 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures reached their highest prices in more than five weeks on Friday on expectations for increased pork demand from China, the world's top importer.

Live cattle futures ended higher after dropping to their lowest prices in more than a week.

Hog traders expect China, the world's biggest hog producer, to ramp up pork imports later this year after a fatal hog disease killed millions of pigs there and lifted pork prices.

In the United States, meat packers slaughtered an estimated 2.285 million hogs this week, down from 2.374 million last week, according to U.S. Department of Agriculture data. The decline helped support to prices, said Karl Setzer, commodity market risk analyst for AgriVisor.

"Slaughter numbers have slipped considerably from a week ago," he said.

CME August lean hog futures closed up 1.100 cents at 83.875 cents per pound, while October hogs climbed 2.025 cents to 78.925 cents. Both contracts traded to their highest prices since June 11.

Increased purchases of U.S. pork by China would help reduce American meat inventories that swelled as farmers expanded herd sizes and meat packers slaughtered more animals.

Large cattle supplies and declining beef prices weighed on cattle futures this week, but cattle futures ended higher on Friday ahead of the release of USDA supply data.

The USDA, in a monthly report, said 11.485 million head of cattle were in feedlots on July 1, the highest inventory for that date since the agency began tracking it in 1996. That compared with analysts' expectations for 11.497 million.

The USDA also said 1.756 million head were placed in feedlots in June, compared to analysts' estimates for 1.766 million.

The data was "about as neutral as can be" for cattle futures, CHS Hedging said in a note.

But the lower-than-expected placements could help support cattle futures on Monday, said Rich Nelson, chief strategist for U.S. broker Allendale.

"This tightens up the expected supply for the December to March period," he said.

Steady cash cattle prices of $111 per cwt in Texas and Kansas could limit gains in the market, traders said.

CME August live cattle futures closed up 0.200 cent at 107.600 cents per pound. CME October cattle rose 0.250 cent to 108.500 cents per pound.

CME August feeder cattle futures advanced 0.550 cent to 139.975 cents per pound. September feeders edged up 0.325 cents to 139.800 cents per pound.

(Reporting by Tom Polansek in Chicago; Editing by Richard Chang)

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