CHICAGO, June 24 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures fell sharply for a third straight session on Monday in a technical and fund- selling drop fueled by ample supplies of hogs and pork.
Actively traded nearby contracts shed more than 4%, with losses over the past three sessions topping 10%.
Hog futures tumbled despite signs of improving pork import demand by China, the world’s top market, to compensate for herd losses due to a fatal hog disease called African swine fever. Customs data showed China’s pork imports surged nearly 63% in May from the same month last year.
But shipments of U.S. pork to China have so far fallen short of market expectations and supplies in U.S. cold storage warehouses have swelled.
U.S. slaughter rates, meanwhile, are rising as hogs held back from the market by farmers anticipating a China-led bump in prices are now sending those animals to slaughter.
“We’re just not moving the pork like we need to,” said Mike Zuzolo, president of Global Commodity Analytics.
CME July lean hog futures tumbled 3.400 cents to 72.850 cents per pound while the most active August contract dropped 3.675 cents to 74.225 cents per pound. Both were the lowest since August 2018.
Trading limits had been expanded to 4.5 cents on Monday after Friday’s limit-down close. The limits will revert back to their normal 3 cents on Tuesday.
Live and feeder cattle futures came under pressure from a U.S. Department of Agriculture report, released late on Friday, showing larger-than-expected feedlot cattle placements in May.
The USDA also said there were 11.7 million head of cattle in feedlots on June 1, in line with analysts’ expectations. That was the highest June 1 inventory since the agency began tracking the data in 1996.
USDA cold storage data showing a 13% drop in total beef supplies at the end of May, compared with a year earlier, offset some weakness in live cattle.
Unwinding of short cattle/long hog positions further underpinned live cattle prices and pressured hogs.
CME August live cattle ended up 0.200 cent at 102.425 cents per pound. Deferred month contracts were down 0.125 to 0.475 cent. CME August feeder cattle ended 1.900 cents lower at 131.775 cents per pound.
Reporting by Karl Plume; Editing by Lisa Shumaker