CME: Hogs futures fall, beef up

Hog prices blamed on slower slaughter, heavier pigs
calendar icon 14 January 2022
clock icon 2 minute read

Chicago Mercantile Exchange (CME) lean hog futures fell on Thursday amid concerns that a reduced pace of slaughtering is limiting demand for pigs that are growing heavier, analysts said.

Slow slaughtering has weighed on hog and cattle futures because livestock back up on farms when they cannot be processed, traders said. Slaughtering has eased as rising COVID-19 cases, particularly of the Omicron variant, have led to staffing shortages, they said.

Meat processors slaughtered an estimated 456,000 pigs on Thursday, down 2% from a week ago and 6% from last year, the US Department of Agriculture (USDA) said. Slaughtering on Wednesday fell to its lowest level since August, reported Reuters.

Some meat processors slow slaughtering to increase profit margins by limiting supplies, said Brian Hoops, president of US broker Midwest Market Solutions.

"It would be much more positive to work through some of these hogs," Hoops said.

The average weight for hogs in Iowa, southern Minnesota and South Dakota in the week ended 8 January was 292.2 pounds, up from 291.4 pounds in the previous week, the USDA said.

"It's bearish because we have more product that way," Hoops said.

CME February lean hogs ended down 1 cent at 77.850 cents a pound, giving back gains from Wednesday.

Still, the USDA reported mostly higher US wholesale pork cutout values, with the carcass value up by $10.82 per hundredweight (cwt).

Pork processors earned about $19.95 per hog slaughtered on Thursday, up from $13.40 on Wednesday, said A week ago, margins were $20.30 per hog.

Beef processors' margins rose to $344.40 per head of cattle on Thursday from $323.95 on Wednesday and $225.35 per head a week ago, said.

Boxed beef prices were higher for choice and select cuts, the USDA said.

CME February live cattle futures settled up 0.425 cent at 137.000 cents per pound. March feeder cattle futures ended 1.700 cents higher at 166.725 cents per pound, as prices tumbled for grains and soybeans used to make livestock feed.

Source: Reuters

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