Chicago | Reuters — U.S. lean hog futures rose to a three-month high on Tuesday while live cattle declined as some investors unwound hog-cattle spreads, traders and analysts said.
Traders locked in profits on long cattle-short hog spreads, with Chicago Mercantile Exchange live cattle declining for the first time in four sessions and easing from a two-week peak.
Investors also were evening up positions ahead of the U.S. Department of Agriculture monthly Cattle on Feed report due on Friday. Analysts polled by Reuters expected the USDA to show cattle placed on feed last month up slightly from a year ago.
“There’s a fair amount of the trade that’s long cattle and short hogs, and it’s not a profit until you take it,” said CHS Hedging broker Steve Wagner.
USDA data released on Monday showing U.S. pork belly stocks of 34.045 million pounds in April — lowest ever for that month — also bolstered lean hog futures, Wagner said.
“Pork bellies are down to a historic low, and that is at a time demand will typically be strongest,” he said.
Retailers have been stocking up on meat cuts ahead of the U.S. Memorial Day holiday on Monday, the unofficial beginning of the summer outdoor grilling season.
USDA data released after the close of trading showed higher wholesale pork prices, including steep gains in pork bellies, while wholesale beef prices declined.
CME June lean hog futures jumped 0.8 cent, to 80.15 cents/lb., and July hogs eased 0.25 cent, to 80.025 cents/lb.
CME June live cattle were down 0.85 cent to 123.075 and August cattle were off 0.7 cent to 121.325 cents, while August feeder cattle eased 1.275 cents, to 151.5 cents.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.