CHICAGO (Dow Jones)--U.S. lean hog futures were mixed in trading Monday on a broad sell-off in stock markets worldwide and another record for wholesale pork prices.
August hog futures rose 0.22 cent, or 0.2%, to $1.0515 in trading at the Chicago Mercantile Exchange. October hogs fell 1.05 cent, or 1.1%, to 90.8 cents a pound.
The front-month hogs contract continued a recent trend of ignoring disturbing economic news and market sell-offs, thanks in large part to unyielding demand for U.S. pork. Wholesale prices hit a record high Friday for the eighth time in nine days as exports continue to soar compared to last year. The government of China, which consumes more pork than any other country, has moved aggressively to rein in spiraling food prices there.
The U.S. Department of Agriculture's national weighted average hog price on Friday gained 77 cents to $108.87 a hundred pounds.
Longer-term futures felt pressure in the first trading session since ratings company Standard & Poor said Friday it has downgraded U.S. government debt from its long-held triple-A rating. Markets worldwide also fell sharply Monday after German Chancellor Angela Merkel said she won't support a bigger rescue fund for troubled sovereign debt in euro-zone countries.
The Dow Jones Industrial Average was recently down 256 points to 11188 points in mid-morning trading. Crude was down 3.4% to $83.80 a barrel and the dollar rose in value against the euro. A rise in the greenback's value typically weighs on dollar-denominated commodities since foreign buyers have less buying power.
There are also rising suspicions that the recent rise in futures and pork prices could represent the peak of the summer cycle, said Rich Nelson of brokerage Allendale Inc. Supplies of live animals typically grow in autumn as cooler temperatures are better for raising hogs and producers bulk up production for the fall.
Tyson Foods Inc. (TSN) said Monday it expects hog supplies in 2012 to be comparable to 2011. The company also expects exports to remain strong in 2012.
Cash hog prices Monday are expected to be generally flat but with some weaker bids possible.
Pork processors may begin the week with a cautious outlook for hog prices, following the S&P's downgrade of the U.S.' debt rating. However, seller resistance, continued strong export sales, lighter average weights, and current, or up to date, hog shipments could limit declines in cash markets and possibly force packers to pay mainly steady prices, said livestock dealers.
Analysts predict Monday's hog slaughter to be around 391,000 head.
The latest Dow Jones Newswires pork packer margin index was plus $1.78 per head, compared with minus 74 cents the previous day.
The terminal markets are expected steady to firm with tops from $70 to $75 a hundred pounds.
The latest CME two-day lean hog index, calculated using USDA market data, on Thursday was up 1.09 cents to $1.0655 a pound.