CME update: hog futures extend their rally as supplies remain tight
CME lean hog futures hit contract highs for the third consecutive day on 4 May as a strong cash market and restricted supplies push up prices.
5 May 2021
3 minute read
By: Reuters reports that solid demand for pork has helped boost the market, with meat processors paying up to buy hogs from producers, analysts said.
The US Department of Agriculture pork cut-out value has climbed recently, reflecting the demand. The cut-out slipped by $0.48 to $111.18 per cwt for carcasses on 4 May, though.
Hog supplies remain limited, in contrast to ample supplies of cattle available in the market, said Rich Nelson, chief market strategist for Illinois-based broker Allendale.
"The hog side now has a shortening supply of hog numbers," he said.
CME most-active June lean hogs set a new contract high of 113.800 cents per pound before trimming gains to settle up 0.9 cent at 113.550 cents per pound. The contract has gained 37% this year.
July hogs set a contract high for the third consecutive day, topping out at 113.650 cents per pound before ending at 113.425 cents.
Meatpackers are slaughtering a steady number of hogs at a time of year when the pace of slaughter would normally be declining, Nelson said.
Packers processed an estimated 487,000 hogs, compared to 486,000 hogs a week ago, according to the US Department of Agriculture.
