Lean hog futures settle up - CME
Cattle futures end mixed as traders question slaughter pace
22 July 2024
2 minute read
By: Chicago Mercantile Exchange (CME) nearby live cattle futures ended higher on Friday, amid technical trading ahead of a monthly government cattle supply report, Reuters reported, citing analysts.
Feeder cattle futures closed lower. Lean hogs firmed on renewed trade tensions between China and the EU, traders said.
But what caught much of the trade off-guard late in the session was the sluggish slaughter rate of cattle and hogs on Friday, raising trader concerns that a global tech outage that disrupted operations in multiple industries could have caused the slow-down.
Tyson Foods, the largest US meatpacker, said Friday it was working to restore systems that may have been affected.
The US Department of Agriculture reported (USDA) that pork processors were slated to slaughter 420,000 hogs on Friday, compared to 448,000 a week earlier, while beef packers would slaughter 103,000 head of cattle, compared to 118,000 animals a week earlier.
While two hog plants had been scheduled to be shut down prior to news of the tech outage, the hog and cattle slaughter pace was much slower than the trade expected, said Rich Nelson, commodity analyst at Allendale Inc.
The slower cattle processing pace may be partly due to tightening packer margins, Nelson said. But the outage appears to have been a bigger issue than the trade thought for both beef and pork processors, he said.
After the market closed Friday, USDA also reported far fewer cattle had been placed into feedlots in June than analysts expected, indicating fewer animals could be ready for slaughter later this year. Analysts surveyed by Reuters had forecast the number of cattle placed on feed in June would be down 2.8% - but USDA instead reported a 7% drop.
CME August live cattle futures ended up 0.850-cent at 183.100 cents per pound, while most-active October live cattle futures rose 0.450-cent at 183.475 cents per pound.
CME August feeders dropped 0.625-cent at 255.600 cents per pound.
CME August lean hog futures settled up 0.22-cent at 91.575 cents per pound. October lean hog futures ended up 0.525-cent at 74.550 cents per pound.
