Chicago | Reuters — Chicago Mercantile Exchange lean hog futures closed higher on Tuesday, bouncing after a three-session slide as wholesale pork prices rose and cash hog prices firmed, traders said, while tight cattle supplies sent futures to life-of-contract highs.
CME August lean hogs settled up 3.4 cents at 97.575 cents/lb., and the October contract rose 1.8 cents to end at 82.975 cents (all figures US$).
The U.S. Department of Agriculture (USDA) quoted the wholesale pork carcass cutout up $4.04 at $111.99 per hundredweight (cwt), its highest level since last August, led by a jump in prices for pork bellies.
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The CME lean hog index, a two-day weighted average of cash hog prices, rose by 72 cents, to $98.15/cwt, its highest since mid-September.
Some traders attributed the rally to short-covering. “A lot of traders are tired of getting chopped up in the market and (are) heading to the sidelines,” said Dan Norcini, an independent livestock trader.
Cattle futures ended higher as market players expected tightening U.S. cattle supplies to continue to support cash markets. Drought has shrunk the size of U.S. cattle herd, USDA said in January.
“The cattle numbers are way down, and I think they are going to continue to go down as we get to the end of the year,” Norcini said.
CME most-active August live cattle futures settled up 1.625 cents at 178.825 cents/lb. after posting a life-of-contract high at 179.4 cents, and the October contract ended up 1.775 cents at 181.725 cents after peaking at 182.325 cents.
August feeder cattle futures settled up 0.9 cent at 247.15 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
