Chicago | Reuters — Chicago Mercantile Exchange lean hog futures rallied for a second straight session on Wednesday and the spot contract rose to the highest in 6-1/2 years on elevated pork prices and expectations for continued strong pork export sales.
Pork prices have been rising, led by higher pork belly values, as retailers and restaurants stock up in anticipation of improved meat demand as economies re-open from coronavirus shutdowns and warmer weather ushers in the outdoor grilling season.
Strong pork exports, notably to China, added support. The U.S. Department of Agriculture (USDA) is due to update weekly export sales early on Thursday.
“Higher pork prices continue to keep the hogs very underpinned, as are expectations for very strong weekly export sales tomorrow,” said Mike Zuzolo, president of Global Commodity Analytics.
The wholesale pork cutout price dipped by 10 cents on Wednesday afternoon after peaking on Monday at its highest since last May, according to U.S. Department of Agriculture (USDA) data.
CME April lean hog futures rose 0.775 cent to settle at 93.675 cents/lb., the highest for a front-month contract since October 2014 (all figures US$). Actively traded June futures jumped 1.35 cents, to 102.325 cents.
Live cattle futures followed hogs higher after the spread between cattle and hog prices recently narrowed to the tightest in about 10 months.
Hopes for increased beef demand and firmer weekly cash sales in the closely followed online Fed Cattle Exchange added support.
CME April live cattle rose 1.225 cents to 119.425 cents/lb., while June futures gained 0.575 cent, to 122.025 cents.
April feeder cattle settled ended up 1.325 cents at 144.65 cents/lb.
Traders are looking ahead to Friday’s monthly USDA Cattle on Feed report. Analysts expect higher on-feed supplies as of March 1, while placements and marketings were seen declining from a year ago.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.