Lean hog futures settled the holiday-shortened trading week more than 4% lower as demand concerned weighed on prices. Some analysts are speculating that the market may have already bottomed, but with so much demand uncertainty due to the coronavirus public health crisis, investors are far from bullish.
August lean hog futures dipped 0.025 cents, or 0.05%, to 49.05 cents per pound at 16:42 GMT on Friday on the CME. Lean hog prices suffered a 4.29% loss for the week, adding to their year-to-date declines of more than 31%. Over the last 12 months, lean hog contracts have plunged nearly 38%.
The global hog market is presently oversupplied, despite a large number of factories worldwide that had to curtail operations due to outbreak concerns. Although the market is down a little more than 3% from the same time a year ago, there are ample inventories in the international pig market.
The cattle slaughter did experience a slowdown earlier this spring, rates have since quickly recovered. Wholesale prices have stabilized as domestic choice and select cutout values firmed at the beginning of the trading week.
Analysts are quite aware of the supply situation in the US, but the foreign demand, especially from China, is still uncertain. With renewed demand in the world’s second-largest economy, there had been optimism that Beijing would ramp up its pig imports.
According to forecasts from the US Department of Agriculture (USDA), American pork exports are projected to top last year’s levels. In March, the US had exported more than 700 million pounds, an all-time high, and approximately half of that was shipped to China, Hong Kong, Mexico, and Japan. But all eyes will be on next week’s USDA report that will verify the latest pork export sales to China.
Last week, the USDA published its quarterly hog report and said there had been a larger-than-expected hog herd, resulting in a huge sell-off.
In other agricultural commodities, August corn futures tumbled $0.07, or 2.00%, to $3.435 per pound. August wheat futures fell $0.0675, or 1.35%, to $4.92 per bushel. August soybean futures dipped $0.02, or 0.22%, to $8.97 a bushel.