U.S. hog futures traded mostly higher Friday as wholesale pork prices jumped and cash markets strengthened.
The lean-hog futures contract for June, the most-actively traded, rose 0.25 cent, or 0.3%, to 94.45 cents a pound, while the July contract traded 0.10 cent lower at 94.05 cents a pound at the Chicago Mercantile Exchange. The May contract, which expires Friday, traded 0.125 cent, or 0.1%, lower at 92.5 cents a pound in light volume.
A combination of increasing demand and a seasonal pullback in supplies has driven a recovery in prices over the last week. Hog futures had slid sharply after setting record highs last month.
Helping to fuel the rebound is expectation for increased consumer demand as weather conditions improve and outdoor grilling picks up, and supermarkets increase promotion for the Memorial Day, Father's Day and July 4th holidays, analysts said.
Wholesale pork prices continue to climb, with the U.S. Department of Agriculture reporting Thursday a one-day jump of 2.9% in the pork carcass cutout value to $95 per hundred pounds. So far this week, the pork carcass value has gained $4.56 per hundred pounds, or 5%.
The futures market also has seen a slowing of commodity investors broadly liquidating positions, which had helped to fuel recent declines, said Randy Fisher, president of Fisher Commodity Services.
Analysts said additional price support this week has come from pork export data released by USDA Thursday that showed March pork exports--the latest month for which data is available--totaled 490 million pounds, up more than 25% from last month and the same period a year ago.
Cash hog markets are expected to trade from steady to as much as $1 per hundred pounds higher Friday as buying interest for next week increases and a rebound in wholesale pork prices boosts demand. Some packing plants may plan to process more hogs next week to fill their pork orders for the upcoming Memorial Day holiday.
The terminal markets are expected to trade steady to firm, with top prices predicted from $61.50 to $62 per hundred pounds on a live basis.
The latest Dow Jones Newswires pork packer margin index was plus $3.36 per head, compared with plus 38 cents the previous day, as the margin continues to rise after falling into negative territory late last week and early this week.
Analysts predict Friday's hog slaughter to be around 384,000 head and Saturday's at about 19,000 head.
The latest CME two-day lean hog index, calculated using USDA market data, for Wednesday was 91.77 cents, up 0.06 cent.