Hog Futures Fall on Supply Pressure
September 21 2017 - 3:38PM
Dow Jones News
By Benjamin Parkin
Hog futures fell to the lowest close this year on Thursday as
meatpackers seized on low cash prices to slaughter swine at a
record rate.
Two new pork packing plants that opened in the Midwest in
September have increased U.S. pork processing capacity. That has
sparked record-high slaughter numbers for this time of year without
a corresponding increase in demand, said Craig VanDyke of Top Third
Ag Marketing.
Analysts say the added capacity should eventually boost cash
market prices for slaughter-ready hogs as packers compete to fill
their plants. But that effect is likely to be delayed by rising hog
weights, falling meat prices and weaker-than-expected pork
exports.
"There ain't a single bullish factor out there," Mr. VanDyke
said. "Without any love from the demand side, it's going to be hard
to keep any support on the cash."
Hog futures on Thursday fell to a low for the year. October lean
hog contracts at the Chicago Mercantile Exchange fell 2.3% to
57.325 cents a pound, the lowest close since Dec. 13.
December-dated contracts fell 3.6% to 57.8 cents a pound.
Cash hog prices were expected to fall again on Thursday after
dropping every day for over two weeks. That has helped push
pork-packing margins just short of $50 a head, the highest in
months.
Cattle futures, meanwhile, eased after closing near their upper
limit on Wednesday. Traders anticipated an uptick in cash prices
this week after cattle traded for $106.67 per 100 pounds at
Wednesday morning's Fed Cattle Exchange auction, up $2 from last
week's average.
The auction volume of a little over 600 was light, however, and
there was no follow through trade as packers and feedlots butted
heads over prices. Traders were waiting to see if a trend for the
week emerged before placing further bets on higher cattle
futures.
CME October live cattle contracts fell 0.8% to $1.101 a
pound.
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
September 21, 2017 15:23 ET (19:23 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.