CHICAGO, June 26 (Reuters) - U.S. lean hog futures plunged by as much as the daily trading limit on Friday and ended sharply lower after the U.S. Department of Agriculture (USDA) estimated supplies above already-high trade expectations.
Economic concerns amid rising novel coronavirus infections added pressure to hogs and also dragged down cattle futures, which finished the day flat to mostly lower. Wall Street’s major indexes tumbled more than 2% on Friday.
Livestock markets have been hard hit by coronavirus-related closures of restaurants and food service businesses, key outlets for items like bacon and high-end cuts of beef. Closures at packing plants have also backed up supplies of market-ready animals, pressuring cash markets.
The USDA’s quarterly hog inventory report, released after Thursday’s close, showed a record-large June 1 supply of hogs that was up 5.2% from a year earlier. Analysts, on average, had expected a 3.7% increase.
“The market reacted to the report and the report came in a lot more bearish than most of us were expecting,” said independent trader Dan Norcini.
A greater-than-expected supply of heavier hogs put pressure on the actively traded August contract, which traded limit-down during the session, as those animals will be coming to market in the near term, he said.
Chicago Mercantile Exchange (CME) July lean hogs dropped 1.650 cents to 45.275 cents per pound, while August ended down 3.200 cents at 48.125 cents per pound. July, August and October futures posted contract lows.
Cattle futures were weighed down by spillover pressure from hogs and by concerns about beef demand as some states stalled or reversed their reopening plans due to rising coronavirus infections.
CME August live cattle ended down 0.050 cent at 96.025 cents per pound. Deferred-month contracts were down as much as 0.975 cent. August feeder cattle fell 0.650 cent to 132.600 cents per pound. (Reporting by Karl Plume Editing by Sonya Hepinstall)
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