U.S. lean hog futures traded higher Wednesday as shrinking supplies and rising wholesale pork prices helped offset weak U.S. economic data.
Lean hogs for July recently traded 0.2 cent, or 0.2%, higher to 94.65 cents a pound, while the August contract rose 0.42 cent, or 0.5%, to 94.42 cents a pound at the Chicago Mercantile Exchange.
Hog futures continue to rally from nearly two-month lows on falling supplies and continued strong export demand. In the last week, South Korea officials said the nation expects to double its imports this year, and U.S. government data showed strong, overall export demand through April.
Providing further support is continued strength in the cash market for hogs and increasing wholesale pork prices, said Don Roose, president of U.S. Commodities.
The U.S. Department of Agriculture's pork carcass composite value, a measure of wholesale prices, Tuesday was up 64 cents to $91.64 a hundred pounds.
Economic data released Wednesday raised concerns about the strength of the U.S. economy. The Empire State Manufacturing Survey showed conditions for manufacturers in the New York region deteriorated in June. The index of general business-conditions plunged by 20 points to -7.8, falling below zero for the first time since November.
U.S. equity markets opened lower on the data, but have since pared some of those losses. Livestock producers worry that if the economy weakens further consumers will curb their spending on food, which could negatively affect pork demand.
Cash hog prices Wednesday are expected mostly steady. Some processors still need a few loads of animals for arrival later this week to complete their slaughter schedules. Some firm bids may be seen as the day progresses for next week's delivery if processors are short on supplies, dealers said. livestock dealers said. Meanwhile, hog supplies overall are experiencing seasonal declines, and average weights are falling, helping to prop up cash prices.
The USDA reported average weights for barrows and gilts in Iowa/southern Minnesota last week at 268.6 pounds, down 2 pounds from the previous week and 2.4 pounds below the year-ago level.
Analysts estimate Wednesday's slaughter to be around 406,000 head.
The terminal markets were expected to trade mostly steady to firm at some locations with top prices from $61 to $63 a hundred pounds on a live basis.
The latest Dow Jones Newswires pork packer margin index was minus 16 cents a head, compared with minus $1.26 a head the previous day.
The latest CME two-day lean hog index, calculated using USDA market data, for Monday was 91.41 cents, up 0.44 cent.