CME Futures Tumble to Four-Month Lows

A slump in the Japanese yen and Russia's recent ban on U.S. pork imports helped fuel a sharp drop in CME Group lean hog futures over the past month, casting doubt over producers' profitability this spring and summer, according to Purdue University economist Chris Hurt.

In early February, Russia banned imports of U.S. beef and pork due to concerns over a feed additive; soon after, China said it will more closely monitor U.S. pork imports. While Russia comprises a relatively small share of the global market, the news came as the yen was in the midst of a 20% drop against the U.S. dollar.

Japan is the largest U.S. pork buyer, and the yen's slide reduces the country's buying power for foreign products, Hurt wrote on the farmdocDaily agricultural news site. "These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels, as had been expected," Hurt said.

“For now, pork producers' optimism for a return to profitability this spring is on hold until feed prices can moderate later in the summer," he added. On March 5, CME Group April lean hog futures settled at 79.25 cents a pound, down 11% since the end of January and the lowest close in four months for nearby futures.

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