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CME update: lean hog futures fall on weaker wholesale pork prices

US lean hog futures fell on 15 May due to sluggish wholesale pork prices and worries of an oversupply of hogs in the country.

18 May 2020, at 7:51am

According to reporting from Reuters, CME June lean hogs settled down 0.875 cent at 57.875 cents per pound and the July contract ended down 1.050 cents at 57.750 cents.

After the close, the USDA showed the US pork cutout, an indicator of wholesale prices, down $3.67 at $110.12 per cwt. The price for pork bellies, used for bacon, was down nearly $22 at $112.48, after rising above $200 earlier this week.

The trend follows pressure from a larger weekly cattle and hog slaughter.

The COVID-19 pandemic has wreaked havoc on the pork industry this spring. Outbreaks caused at least 30 processing plants to temporarily idle production over the past two months. The slowdown in processing has caused huge price volatility.

The shutdowns also caused massive bottlenecks of market-ready hogs in the US, normally a bearish market factor.

As slaughterhouses begin reopening, livestock futures markets have remained unsteady.

Some traders suspect that meatpackers are paying up for cash cattle out of fears of a federal investigation into meat price disparities. President Donald Trump last week said he had urged the Justice Department to look into allegations that the meatpacking industry broke antitrust law because the price that slaughterhouses pay farmers for animals dropped even as meat prices rose.

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