Chicago | Reuters –– U.S. lean hog futures rose as much as two per cent on Thursday, rallying to the highest levels in a week on gains in pork prices and as investors exited short positions ahead of a long holiday weekend, traders said.
Most-active July hogs settled 1.45 cents higher at 81.275 cents/lb., with the 1.9 per cent gain the biggest rise since May 11 (all figures US$).
The U.S. Department of Agriculture after the close of futures trading on Wednesday showed sharply higher wholesale pork prices, triggering a wave of futures buying when trade resumed early on Thursday.
USDA late on Thursday showed wholesale pork prices down $1.46 at $83.57/cwt, below the seven-month high of $85.03 seen on the previous day.
The government also showed a downturn in wholesale beef prices. Most retailers have bought the meat they needed for holiday-related demand surrounding U.S. Memorial Day, a three-day weekend that is considered the unofficial start of summer grilling season.
Live and feeder cattle futures also gained at the Chicago Mercantile Exchange, in technical buying and short-covering ahead of the weekend. Gains in cattle came despite weaker trades in cash cattle markets in the southern U.S. Plains.
Sales of fed cattle in Kansas and Texas of about $125/cwt followed trades last week of $130 to $132. However, the cash trades still came at a steep premium to front-month June futures, which settled 0.775 cent higher at 118.925 cents/lb.
Steve Wagner, an analyst at CHS Hedging, said June cattle futures and the cash market will narrow their spread as the new month nears, either in the form of lower cash cattle trades or higher futures prices.
“Those two (futures and cash) don’t have to come together on June 1 but they will come together,” Wagner said.
He added that weaker beef prices triggered short-covering in futures as investors closed out their positions before the weekend.
Most-active August live cattle settled 1.95 cents higher at 115.35 cents/lb. while August feeder cattle finished 2.725 cents higher at 145.4 cents/lb.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.