Lean hog futures tumbled in all contracts Tuesday with the summer months falling the hardest as investors exited long positions in tandem with widespread declines across most commodity and stock sectors.
Lean hog prices fell nearly the exchange-imposed daily limit of 3 cents on spillover from limit declines in live cattle, feeder cattle and CBOT corn futures.
April, the front-month hog contract at the Chicago Mercantile Exchange, hit a nine-week low and closed down 1.07 cents, or 1.3%, at 84.87 cents a pound. June, the leader among lean hogs in open interest, fell 2.80 cents, or nearly 2.9%, and closed at 94.75 cents, lowest since Jan. 11.
The sharp declines in lean hogs and other commodity sectors represented widespread selling by large investors as they reduced risk in their investment portfolios, Nelson said.
Following the steep declines, some traders took short-position profits by buying back contracts they had previously sold at higher levels, a broker said. April has fallen 4.975 cents a pound, or 8.3%, in just the latest three sessions while June has declined 6.70 cents, or 6.6% in the same period.
Cash hog prices were reported flat to weak as most processing plants held adequate supplies into the second half of the week. Some plants were still adding to their inventories for Friday and/or Saturday to complete their slaughter schedules, which may provide enough support to keep prices from falling much at the end of the day, said livestock dealers and market managers.
The U.S. Department of Agriculture's pork carcass composite price has risen the past three days, with Monday's quote up $0.69 at $91.88, a signal that demand for the pork hasn't declined so far following the earthquake in Japan, dealers and analysts said. Some concerns remain among futures traders, however, that export sales to Japan could be reduced or delayed later if economic issues soften pork demand.