Live cattle, lean hog futures fall on sluggish slaughter - CME
Disruptions blamed on weather, labour shortages and COVID
10 January 2022
2 minute read
Chicago Mercantile Exchange (CME) live cattle and lean hog futures fell on Friday as sluggish slaughter rates continue to drag on prices, traders said.
"They're both facing the same fundamental music – this slaughter disruption due to weather, labour tightness and COVID," said Dennis Smith, commodity broker at Archer Financial.
CME February live cattle futures settled down 0.025 cents at 137.325 cents per pound, ending the week down 2.375 cents, a 1.7% drop, reported Reuters.
CME March feeder cattle futures lost 0.600 cents to 166.675 cents per pound, ending the week down 3.275 cents, a 1.93% weekly loss.
With just 112,000 head of cattle slaughtered on Friday, processers ended the week at 562,000 head processed, 24,000 head short of the same week a year ago.
Tighter processing has supported wholesale beef prices, with choice cuts gaining $3.26 to $271.82 per cwt, while select cuts added 46 cents to $261.10, according to the US Department of Agriculture (USDA).
Processors are offering firmer cash prices for market ready cattle, with Nebraska cash trade topping at $141 per cwt, while Southern Plains cattle traded closer to $138 per cwt.
Lean hog futures, while suffering from similarly soft slaughter capacity, were supported much of the week as smaller live hog inventories eased pressure on processors, a trend that's expected to continue into the spring.
"The kill is projected to be down 5% to 6% from a year ago in the first quarter," Smith said. "That's going to help these guys deal with the labour issues."
CME February hogs dropped 3.300 cents to 79.650 cents a pound, despite back-month contracts finding life-of-contract highs before turning lower.
The Lean Hog Index, a two-day weighted average of cash hog prices, fell 30 cents to $73.57 a pound.
For the week, hog slaughter of 2.316 million head was behind year-ago levels by 129,000 head, the USDA said.
Meanwhile, the deadly hog disease African swine fever has been found in a wild boar in Italy's Piedmont region, the regional government said in a statement. Markets seemed little moved by the news Friday afternoon.
Source: Reuters
