The Chicago Mercantile Exchange recently reported an all-time high September lean hog volume of 356,295 contracts, compared with 215,233 in August and 232,705 a year ago. The month that held the previous record was in July at 315,197 contracts.

What's more, from January through September, which consisted of 189 business days, hog volume posted a 41.7% jump compared with the first nine months of 2003 that had one less trading day.

An Oct. 4 CME Research & Product Development department analysis said: "Disruptions in global trading can have important consequences for derivatives (futures and financial markets)."

Exchange researchers found that Canadian cattle imports that were halted since May 2003 and "dozens" of countries banning U.S. beef shipments due to mad-cow disease concerns following a case discovered in Washington state in December 2003 have trimmed U.S. beef exports by about 90% this year.

Other sources of protein are in high demand because the U.S. and Canada are major suppliers of beef to other parts of the world, and as a result U.S. pork exports jumped by more then 30%, CME analysts said.

"As global trading patterns emerge, the attendant adjustments in risk management should continue to be reflected in the CME livestock markets," the analysts added.

Cash hog prices in September reflected pork's success as hogs on a dressed basis in Iowa and Southern Minnesota peaked at $81.32 per hundredweight on Sept. 23, compared with $56.97 that day a year ago. The high for Iowa/southern Minnesota cash prices in September 2003 was at $59.75 hit on Sept. 19.

The pork cutout price, a composite carcass value derived from primal cuts, also topped out on Sept. 23 at $76.96 per hundredweight. A year ago, the cutout value was reported at $64.44.

The Oct contract hit a high on Sept. 24 at 77.85 cents per pound compared to the Oct 2003 contract's top of 58.40.

Domestic and foreign pork demand remained solid in the midst of hog production that through September was up about 4% versus last year and grew about 5% in September compared with a year ago, according to University of Missouri data.

Industry watchers generally attributed the increased supplies, which at times occurred unexpectedly, to improved sow performance, record Canadian hog imports and the U.S. Department of Agriculture periodically underestimating the nation's hog inventory in its quarterly hogs and pigs reports.

Chuck Levitt, senior livestock market analyst with Alaron Trading Corp., said lean hog futures accomplished a rare feat in that that the pork side of the business showed phenomenal usage while absorbing record supplies, which attracted heavier futures market participation.

Source: eFeedLink - 11th October 2004