U.S. lean hog futures rise as cash market firms; cattle rally pauses
By Julie Ingwersen
CHICAGO, March 30 (Reuters) - U.S. lean hog futures rose on Tuesday, with the benchmark June contract setting a life-of-contract high on firm cash hog prices and signs of tightening supplies at a time of robust demand for pork, analysts said.
On the Chicago Mercantile Exchange, most-active June lean hog futures settled up 0.800¢ at 106.025¢ per pound, after reaching a contract high at 106.375¢.
The CME’s lean hog index, a two-day weighted average of cash hog prices, climbed to $97.38 per cwt, its highest since October 2014.
“The hog market is just strong. Disease issues across the hog belt in the Midwest have been huge,” said Don Roose, president of Iowa-based U.S. Commodities. Futures continue to draw support from the U.S. Department of Agriculture’s March 25 quarterly hog report, which showed a smaller-than-expected U.S. herd, Roose noted.
However, the U.S. pork cutout, an indication of wholesale pork prices, fell 95¢ to $106.89 per cwt on Tuesday afternoon, retreating after a firmer reading at midday.
Consumer demand for pork and beef is rising as the summer grilling season approaches, and at the same time, the restaurant sector is stocking up in anticipation of a vaccine-driven economic recovery.
Strengthening wholesale beef prices have buoyed CME cattle futures since mid-March, but futures closed lower on Tuesday as traders paused to see if the cash cattle market would keep pace.
Benchmark CME June live cattle futures ended down 0.425¢ at 122.225¢ per pound. CME May feeder cattle finished unchanged at 152.200¢, paring gains after setting a contract high at 153.475¢.
Market-ready cattle traded in the Plains cash markets last week at around $115 per cwt, up $1 from the previous week, and feedlots were seeking $118 to $120 this week, traders said. However, front-month April cattle futures are already trading at a premium to those levels, near the equivalent of $121.
“We are waiting for the cash to catch up,” Roose said.
Beef prices continued to march higher, with choice cuts up $5.30 at $244.83 per cwt, according to the USDA. Select cuts rose $3.42 to $235.92 per cwt.
(Reporting by Julie Ingwersen. Editing by Richard Pullin.)
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