Chicago | Reuters — U.S. lean hog futures rose sharply on Friday in a technical and seasonal-buying rally that took prices to the highest in a month, traders said.
Futures were also lifted by stronger cash hog and pork prices and on expectations for improving pork exports, especially if African swine fever in China elevates the country’s demand for imported pork.
Chicago Mercantile Exchange April lean hogs jumped by as much as the daily three-cent limit before settling 2.825 cents higher at 60.55 cents/lb. (all figures US$). June hogs were also limit-up but closed 2.65 higher at 78.175 cents.
“The seasonal trend from here is for tighter hog numbers and the cash trade volume has slowed down in the past few days. The pork cutout has also been steadily moving higher,” said Matthew Wiegand, broker with FuturesOne.
“With the swine fever in China looming in the background, it sets us up for a more positive trend after we hammered futures down for a while,” he said.
The U.S. Department of Agriculture quoted average cash hog prices in the Iowa and southern Minnesota market up $1.83/cwt on Friday.
The closely watched cash pork carcass cutout price was up 79 cents on Friday at $65.04/cwt, a $3.12 gain from a week earlier.
Live cattle futures were also higher on Friday on rising beef prices and as traders took positions ahead of a monthly USDA report on cattle supplies.
After the close, USDA said on-feed supplies of cattle on Feb. 1 were at 100.4 per cent of a year ago, compared with the average trade estimate for 100.2 per cent.
Cattle placements in January were at 94.7 per cent of a year ago and marketings were at 102.8 per cent.
“Supplies always rise heading into the summer. But based on these lower placement numbers, the supplies will be mitigated somewhat,” said Rich Nelson, chief strategist with Allendale Inc.
However, the data were not expected to trigger any steep moves at the open on Monday, he added.
Wholesale beef prices firmed for a seventh straight day on Friday as USDA quoted the choice cutout at $226.13/cwt, up nine cents, and select cuts at $218.78, up 24 cents.
Chicago Mercantile Exchange April live cattle ended up 0.725 cent at 129.675 cents per pound.
Feeder cattle followed live cattle higher, with April futures up 1.7 cents at 147.7 cents/lb.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.