June 28, 2019 / 9:56 PM / 8 months ago

LIVESTOCK-Nearby lean hog futures drop as U.S. herd expansion continues

CHICAGO, June 28 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures were mixed on Friday, with nearby contracts pressured by plentiful supplies of hogs and pork and deferred months buoyed by signs of a slowing multi-year U.S. hog herd expansion, traders said.

Actively traded nearby contracts posted steep declines after the U.S. Department of Agriculture late on Thursday said the U.S. hog herd on June 1 was up 3.6% from a year earlier, above estimates for a 3.0% rise.

The agency’s quarterly hog supply report added to concerns about stiff competition in the pork market.

China, the world’s top pork consumer, has seen its domestic herd decimated by African swine fever, but the country’s imports of U.S. pork have thus far been smaller than anticipated.

Meanwhile, a Chinese ban on Canadian meat shipments stoked fears of increased competition from Canadian pork in other markets, including in the U.S. domestic market.

“We’re still wading through this glut of hogs,” said Dennis Smith, commodity broker with Archer Financial Services in Chicago.

“The other thing that’s weighing on the front end of the market is this concern about Canadian pork coming south with China banning all Canadian pork.”

CME July lean hogs were down 1.725 cents at 72.100 cents per pound while actively traded August fell 1.175 cents to 76.000 cents per pound.

October and December 2019 contracts were also lower, but most 2020 contracts posted gains on the day as the USDA’s quarterly report also indicated that the multi-year U.S. herd expansion may be slowing.

The number of hogs kept for breeding increased just 1.4%, below estimates for a 2.1% rise.

Live cattle futures also ended mixed on Friday on end-of-month and end-of-quarter positioning, while feeder cattle firmed in response to sharply lower corn prices.

Actively traded CME August live cattle ended 1.000 cent lower at 104.350 cents per pound. Spot June futures expired on Friday at 110.500 cents, down 0.075 cent, reflecting steady to higher cash cattle prices.

Feedlot cattle at U.S. Plains markets traded from $109 to $111 per cwt on Friday. Prices in southern areas were mostly steady with last week, while areas further north notched modest week-on-week gains, traders said.

CME August feeder cattle jumped 1.050 cents to 136.850 cents per pound after Chicago Board of Trade corn futures posted their steepest single-day drop in nearly three years. (Reporting by Karl Plume in Chicago Editing by James Dalgleish)

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