Hog futures fell to the lowest close this year on Thursday as meatpackers seized on low cash prices to slaughter swine at a record rate.
Two new pork packing plants that opened in the Midwest in September have increased U.S. pork processing capacity. That has sparked record-high slaughter numbers for this time of year without a corresponding increase in demand, said Craig VanDyke of Top Third Ag Marketing.
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Analysts say the added capacity should eventually boost cash market prices for slaughter-ready hogs as packers compete to fill their plants. But that effect is likely to be delayed by rising hog weights, falling meat prices and weaker-than-expected pork exports.
"There ain't a single bullish factor out there," Mr. VanDyke said. "Without any love from the demand side, it's going to be hard to keep any support on the cash."
Hog futures on Thursday fell to a low for the year. October lean hog contracts at the Chicago Mercantile Exchange fell 2.3% to 57.325 cents a pound, the lowest close since Dec. 13. December-dated contracts fell 3.6% to 57.8 cents a pound.
Cash hog prices were expected to fall again on Thursday after dropping every day for over two weeks. That has helped push pork-packing margins just short of $50 a head, the highest in months.
Cattle futures, meanwhile, eased after closing near their upper limit on Wednesday. Traders anticipated an uptick in cash prices this week after cattle traded for $106.67 per 100 pounds at Wednesday morning's Fed Cattle Exchange auction, up $2 from last week's average.
The auction volume of a little over 600 was light, however, and there was no follow through trade as packers and feedlots butted heads over prices. Traders were waiting to see if a trend for the week emerged before placing further bets on higher cattle futures.
CME October live cattle contracts fell 0.8% to $1.101 a pound.
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(END) Dow Jones Newswires
September 21, 2017 15:23 ET (19:23 GMT)