LIVESTOCK-Hog, cattle futures dive as consumer grocery panic eases

CHICAGO, March 26 (Reuters) - U.S. lean hog futures fell their daily 3-cent limit on Thursday on signs that a consumer meat-buying frenzy has cooled, allowing traders to re-focus on plentiful U.S. hog and pork supplies, traders said.

The benchmark June lean hog futures contract on the Chicago Mercantile Exchange settled down 3 cents at 68.750 cents per lb. Limits will widen to 4.5 cents for Friday’s trade, the exchange said.

Futures surged last week as the coronavirus pandemic led to shelter-in-place initiatives, prompting consumers to stockpile beef, pork and poultry and sending wholesale prices soaring.

But the U.S. pork cutout fell by $1.42 on Thursday afternoon, its third straight daily decline, according to the U.S. Department of Agriculture.

“The idea is that the panic meat buying, along with toilet paper and everything else, has been temporarily satisfied,” said Dan Norcini, an independent livestock trader.

Weekly export data failed to lend much support to hog futures. The USDA reported export sales of U.S. pork in the week ended March 19 at 38,600 tonnes, up 89% from the prior four-week average. Export shipments to China totaled 23,000 tonnes, while new sales to China totaled 9,500 tonnes.

“China was the No. 1 destination, so that was good to see,” said Jeff French, analyst with Top Third Ag Marketing. “If exports do not materialize, we simply have too much pork for the domestic pipeline,” French said.

After the close, the USDA in its quarterly Hogs and Pigs report put the U.S. hog herd as of March 1 at 77.6 million head, up 4% from a year ago and in line with trade expectations, but down from a revised Dec. 1 figure of 78.7 million.

“The report is definitely not friendly as it picked up the extra hogs that we all knew were undercounted in the December report. Some of us wonder if even the revision is large enough, based on the size of these unrelenting (daily) hog slaughter numbers,” Norcini said.

On the cattle side, CME June live cattle futures settled down 2.775 cents at 93.550 cents per pound while the nearby April contract fell 3 cents at 105.450 cents.

CME May feeder cattle futures settled down 3.675 cents at 125.425 cents a pound.

Cattle were pressured in part by news that a record 3.28 million Americans filed for unemployment benefits over the past week, a bearish signal for beef demand.

“That was huge,” French said, adding, “I know they still have to eat, but they surely don’t have to eat expensive beef. There are much cheaper protein alternatives.” (Reporting by Julie Ingwersen; editing by Diane Craft)