Hog Futures Tumble on Large Supplies
22 August 2017 - 5:19AM
Dow Jones News
By Benjamin Parkin
Hog futures started the week sharply lower as traders reckoned
with growing supplies of pork.
Last week's estimated hog slaughter of 2,332,000 head was the
largest weekly slaughter in August on record, said Dennis Smith of
Archer Financial Services. Pork production also rose last week to
the highest in over three months, according to the U.S. Department
of Agriculture.
Demand for pork has been strong this year, but concerns about
oversupply have weighed down prices in recent days. Meatpackers
paid an average of 73.21 cents a pound for hogs in Friday's cash
market, down 2.3 cents from a day earlier. Prices were expected to
fall as much as 2 cents further on Monday.
October hog futures at the Chicago Mercantile Exchange fell 2.2%
to 64.675 cents a pound on Monday, the fourth consecutive day of
decline.
Observers say the immediate catalyst was a downturn in pork
belly prices, which have recently traded at record highs.
"The sharp break in pork belly prices last week was something
that market participants had been pondering for a while but the
speed with which it took place certainly got futures to pay
attention," said the Steiner Consulting Group in a note to
clients.
Cattle futures were mixed. CME October live cattle contracts
fell 0.1% to $1.0585 a pound.
Analysts say traders were consolidating their positions after
prices fell last week on the back of lower cash prices. Similar
concerns about oversupply are dogging the cattle market.
"We are into our peak supplies of fed cattle for the late
summer/early fall time frame," said Troy Vetterkind, owner of
Vetterkind Cattle Brokerage, in a note. "Feedlots want to keep
selling cattle as opposed to backing them up so we likely see the
market act a little sloppy for another week or two."
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
August 21, 2017 15:04 ET (19:04 GMT)
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