U.S. lean-hog futures were slightly higher in early trade on recent strength in the cash market and climbing pork prices.

CME lean hogs for August were recently up 1.5 cents, or 1.6%, to 96.350 per pound. October lean hogs were up 0.9 cents to 88.8 cents per pound.

"The market is reacting to the strong gains posted by both the cash and wholesale markets last Friday afternoon," said Dan Vaught, president of Vaught Futures Insights.

Pork cutout values jumped $2.96 on Friday, analysts noted. Vaught added that supplies of hog and pork values are at their lowest level of the year, and that recent slaughter totals have started declining year-over-year.

The decline in slaughter numbers, at lower weights, "suggests that the supply of market-ready hogs is not living up to expectations," Vaught said.

Prices are also getting spillover support from the cattle complex, which continues to surge Monday following a surprisingly large drop in cattle placed into feedlots in May, as reported by the U.S. Department of Agriculture on Friday.

Live cattle futures had already surged leading into the report Thursday and Friday, but the USDA report gives that market added upside, analysts said. Higher prices for cattle and beef makes it easier for producers and retailers to increase prices for pork and poultry, Vaught said.

After plunging from record highs in April, the market has rebounded strongly the past 10 days. Although worries about the world economy and sluggish domestic demand have loomed over the market, analysts said that retailers have continued to make solid profits on pork sales, and that a robust export market has helped pick up the slack.

CASH MARKETS

Cash bids for hogs in the Midwest direct markets Monday are expected mostly steady with a few locations from $0.50 to as much as $2.00/cwt higher in a catch-up mode from Friday's advances, said livestock dealers and market managers. Most of the processing plants need additional hogs for later in the week due to seasonally tightened supplies, dealers said.

Some plants may reduce their slaughter schedules if processing margins are squeezed further.

Slaughter this week last year was just under 1.947 million, the lightest non-holiday figure of that year.

The USDA's national weighted-average hog price and the pork-carcass composite value on Friday hit four-week highs. The carcass value, a measure of wholesale prices, Friday was up $2.96 per hundredweight to $95.77.

Analysts estimate Monday's slaughter to be around 392,000 head.

The terminal markets were expected to trade steady to higher with top prices seen from $63.50 to $65 on a live basis.

The latest Dow Jones Newswires pork-packer margin index was minus $3.56 per head, compared with minus $6.14 the previous day.

The latest CME two-day lean hog index, calculated using the USDA market data, for Thursday was up $1.17 to $93.68.