U.S. lean hog futures traded mostly higher Tuesday as recent signs of rising demand continue to push prices up.

Lean hogs for July recently rose 0.01 cent, or 0.1%, to 93.6 cents a pound, while the August contract rose 0.45 cent, or 0.5%, to 92.82 cents a pound at the Chicago Mercantile Exchange.

The June contract, which expires Tuesday, fell 0.57 cent, or 0.6%, to 91.9 cents a pound. The weakness could pressure the July and August contracts, which currently trade at a premium.

Hog futures have bounced recently from nearly two-month lows as supplies tighten and concerns over demand ease. The market has gained support from recent signs of improved demand with South Korea officials last week saying they expect pork imports to double this year and U.S. chicken producers looking to slow production and boost prices.

The number of eggs set in incubators, a sign of future chicken supplies, has fallen year-over-year for four straight weeks after climbing for most of the past year. Meanwhile, the supply of broiler-type chicks, which had continued to climb even as eggs set started to drop, fell last week, ending a long string of weekly increases. Tighter chicken supplies should boost prices and make pork more competitive in supermarkets.

Hog futures have been benefiting from the expectations for strong exports and rising chicken prices, but will need additional positive news to continue posting gains, said Rich Nelson, director of research at Allendale Inc.

Also, traders will need to see continued strength in cash markets to push futures higher, analysts said.

CASH MARKETS

The cash hog markets Tuesday are predicted to be mostly steady, but buying interest could be limited since processors have thin to negative margins. Early projections for the weekend slaughter are light, due in part to seasonally tightened supplies.

The U.S. Department of Agriculture's pork carcass composite value, a measure of wholesale prices, Monday was up 67 cents to $91 a hundred weight.

Analysts estimate Tuesday's slaughter to be around 405,000 head.

The terminal markets were expected to trade generally steady to possibly higher at some locations with top prices from $61 to $63 a hundred weight on a live basis.

The latest Dow Jones Newswires pork packer margin index was minus $1.26 per head, compared with minus $6.54 per head the previous day.

The latest CME two-day lean hog index, calculated using USDA market data, for Friday was 90.97 cents, up 0.39 cent.