U.S. lean hogs futures rose Friday as cash prices for pork remained firm despite a summer heat wave that threatens to cool consumers' demand for meat.
Hogs futures for August rose 1.25 cent, or 1.3%, to 99.35 cents a pound in trading at the Chicago Mercantile Exchange. The CME October hogs contract rose 1.2 cent, or 1.3%, to 91.85 cents a pound.
Cash prices for hogs have remained firm all week, even as prices for fresh beef have fallen substantially. Consumers typically grill less meat in July and August, when summer temperatures soar, and an ongoing heat wave has made futures traders more nervous still about a slow-down in meat demand.
"The fact is, we might finish this week with slightly higher cash pork and cash hog prices," said Rich Nelson, director of research at brokerage Allendale Inc.
The U. S. Department of Agriculture's carcass composite value, a measure of wholesale prices, Thursday rose 30 cents to $99.73 a hundred pounds, the second consecutive day of rising prices.
The rise in hogs futures is also striking given the recent sell-offs in corn futures. Lower corn futures typically weigh on livestock futures since producers have fewer feed costs to pass on to meat packers. Corn futures for December were recently down 0.6% to $6.69 1/4 cent in trading at the Chicago Board of Trade.
Cash hog prices Friday are expected to be mostly steady to higher as some processors need additional supplies for early next week, according to livestock dealers.
The oppressive heat and high humidity levels across the Midwest this week have been stressful on the animals and trimmed daily weight gains. Slower weight gains in the hogs could cause some producers to hold off selling for a few days, if possible, to allow the animals to reach the desired size.
Some processing plants were bidding more aggressively on Thursday to secure more hogs for next week. Weighted average prices on both a dressed and live basis climbed.
Analysts predict Friday's hog slaughter to be around 386,000 head and Saturday's to be light at about 2,000 head.
The latest Dow Jones Newswires pork packer margin index was plus $3.34 per head, compared with plus $5.96 the previous day.
The terminal markets were expected to trade mostly steady with top prices seen ranging from $63 to $67 a hundred pounds.
The latest CME two-day lean hog index, calculated using USDA market data, for Wednesday was up 0.42 cent to 95.79 cents a pound.