U.S. lean hog futures rose Thursday as cash prices for live hogs showed signs of stabilizing after weeks of steep declines.
October hogs rose 1.95 cent, or 2.3%, to 86.80 cents a pound in trading at the Chicago Mercantile Exchange. CME December hogs rose 0.72 cent, or 0.9%, to 83.12 cents a pound.
Market participants have been waiting for cash prices for slaughter-ready hogs to stabilize and end their weeks-long decline from record prices in July and August. Prices typically fall in late summer as producers boost supplies seasonally. Then, in September, they often stabilize for a period before falling again through November.
"You get a seasonal rally this time of year post-Labor Day," said Brian Hoops of brokerage Midwest Market Solutions. "We've seen a lot of bad news and absorbed it, and now we're trying to trend higher."
Cash prices fell quicker than usual as hog producers rushed to get in front of falling prices by selling hogs early and, in turn, accelerated the declines. Now, prices could stabilize as meat packers look to take advantage of solid profit margins and still-elevated pork prices and fill bigger slaughter schedules. Slaughter rates are expected to rise about 17% between August and November.
The U. S. Department of Agriculture's pork carcass composite value, a measure of wholesale prices, was up $1.13 at $94.96 a hundred pounds Wednesday.
Cash hog bids were reported mostly steady on buying interest from some plants that needed additional loads to complete this week's slaughter schedules, and also from several processors looking to add to their inventories for next week. In addition, some producers were reluctant to sell additional hogs after prices had tumbled by nearly $50 a head during the past month and with lean hog futures posting strong gains Thursday.
The terminal markets traded steady to $1 per hundred pounds higher with tops from $52 to $61 on a live basis.
Projections for Saturday's slaughter now range from 290,000 to 295,000 head, and estimates for the week's total are mostly around 1.990 million, up about 3.4% from a year ago.