Cattle, hog futures fall to multi-month lows - CME

Recession fears are said to cause the decline
calendar icon 27 September 2022
clock icon 2 minute read

Chicago Mercantile Exchange (CME) live cattle futures hit a two-month low on Monday and the benchmark December lean hogs contract hit an eight-month low as worries about the US and world economy triggered a round of long liquidation, Reuters reported, citing analysts.

"This market is looking for positive news, and not finding a lot. And with all the turbulence out there, and the Dow continuing to go down every single day, there seems to be significant long liquidation," said Altin Kalo, economist at Steiner Consulting Group.

Traders fear that a recession will reduce demand for goods including beef and pork. Commodity funds hold a net long position in live cattle and lean hog futures, leaving both markets prone to long liquidation. 

CME October live cattle settled down 0.775 cent at 143.475 cents per lb and the most-active December contract fell 1.200 cents to finish at 147.350 cents per lb after dipping to 146.575 cents, the contract's lowest since July 22.

CME November feeder cattle settled down 1.200 cents at 177.050 cents per lb after touching 176.025, its lowest since June 13.

A brisk cattle slaughter pace in recent weeks has added to the negative tone, pressuring wholesale beef prices. Choice cuts of beef were priced at $247.84 per hundredweight (cwt) on Monday afternoon, according to the US Department of Agriculture (USDA), the lowest since March 2021.

"The last four weeks, we've been running the fed cattle slaughter almost 4% higher than a year ago. So that is bringing a fair amount of product to the market at a time when demand is not that great. You've just come out of grilling season," Kalo said.

For hogs, CME October lean hogs ended down 2.250 cents at 90.375 cents per lb and benchmark December hogs tumbled 3.400 cents to finish at 79.400 cents per lb after hitting 78.400 cents, the contract's lowest since January 27.

Traders await the USDA's September 29 quarterly hogs and pigs report.

After Friday's close, the USDA reported the number of US cattle on feed as of September 1 at 11.279 million head, about 100% of the year-ago total and in line with analyst expectations.

Cattle marketings during August were 106% of a year ago, in line with trade estimates, while August placements were 100% of a year ago, above the average analyst estimate of 97.3%.

Source: Reuters

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