Hog futures started the week sharply lower as traders reckoned with growing supplies of pork.
Last week's estimated hog slaughter of 2,332,000 head was the largest weekly slaughter in August on record, said Dennis Smith of Archer Financial Services. Pork production also rose last week to the highest in over three months, according to the U.S. Department of Agriculture.
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Demand for pork has been strong this year, but concerns about oversupply have weighed down prices in recent days. Meatpackers paid an average of 73.21 cents a pound for hogs in Friday's cash market, down 2.3 cents from a day earlier. Prices were expected to fall as much as 2 cents further on Monday.
October hog futures at the Chicago Mercantile Exchange fell 2.2% to 64.675 cents a pound on Monday, the fourth consecutive day of decline.
Observers say the immediate catalyst was a downturn in pork belly prices, which have recently traded at record highs.
"The sharp break in pork belly prices last week was something that market participants had been pondering for a while but the speed with which it took place certainly got futures to pay attention," said the Steiner Consulting Group in a note to clients.
Cattle futures were mixed. CME October live cattle contracts fell 0.1% to $1.0585 a pound.
Analysts say traders were consolidating their positions after prices fell last week on the back of lower cash prices. Similar concerns about oversupply are dogging the cattle market.
"We are into our peak supplies of fed cattle for the late summer/early fall time frame," said Troy Vetterkind, owner of Vetterkind Cattle Brokerage, in a note. "Feedlots want to keep selling cattle as opposed to backing them up so we likely see the market act a little sloppy for another week or two."
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(END) Dow Jones Newswires
August 21, 2017 15:04 ET (19:04 GMT)