U.S. hog futures Wednesday extended the recent downturn, pressured by weaker wholesale pork prices Tuesday and a flat-to-lower outlook for cash prices at midweek.
April lean hog futures at the Chicago Mercantile Exchange recently traded down 0.45 cent, or 0.5%, at 87.65 cents a pound. April also hit a five-week low. June was off 0.55 cent, or 0.6%, at 99.37 cents a pound and matched Tuesday's low as the lowest since Jan. 28.
Seasonal weakness in cash hog and wholesale pork prices in March is also contributing to the declines, said Rich Nelson, director of research with Allendale Inc. He said 10-year data show a decline in the CME lean hog index in early to mid March then flat through the end of the month.
Last year, the U.S. Department of Agriculture's national weighed average hog prices declined $4.10 per hundred pounds, or 5.8%, from the first week of March to the last week of the month. Two years ago prices fell nearly $2, or 3.4% during the same period.
Stiff competition from cheap chicken prices and abundant broiler supplies for retailers' advertising space also contribute to weakness in domestic pork prices, Nelson said. That in turn adds to the downside pressure in hog futures.
Consumers may be concerned about rising fuel prices, which could cut into the amount of money they will be willing or able to spend on food. Efforts to stretch their food dollars could result in more price-based shopping and reduce sales of the more expensive cuts, analysts said.
In the cash markets, pork processors are expected to bid flat to lower for hogs at midweek. Most of the plants are well supplied for the week and are quoting for deliveries next week, according to livestock dealers and market managers. The U.S. Department of Agriculture's pork carcass composite value, a measurement of wholesale prices, Tuesday was down $0.36 at $91.60 and has fallen in three of the last four sessions after rallying in late February. Pork prices remain nearly 24% above a year ago.
The terminal hog markets were called mostly flat to lower as well.