CHICAGO (Dow Jones)--U.S. lean-hog futures soared Monday as China said it would take steps to rein in surging pork costs, fueling speculation the Asian nation may import more meat.
Lean hog futures hit the daily limit on one-day price increases in trading on the Chicago Mercantile Exchange, with the August contract up 3 cents, or 3.1%, at 99.17 cents a pound. October contracts also hit the 3-cent daily limit and closed up 3.3% to 92.75 cents a pound.
China is the world's largest consumer of pork, and demand is increasing as more citizens there move into the middle class. Pork prices in China have surged recently and become a main driver of rapid inflation there.
Chinese Premier Wen Jiabao singled out the nation's pork prices while touring rural areas Monday, saying the government will make a priority of keeping a lid on runaway food prices. Wen's comments come as overall inflation reached a three-year-high in June.
"Stabilizing pork markets is a responsibility that the government must not shirk," Wen said in a statement posted on the central government's website.
"The market took that as an indication [China's] going to have to buy more corn to feed hogs, and they're probably going to have to import more pork into their markets," said Mike Zuzulo, president of Global Commodity Analytics. "If he's talking about it, they must need it pretty badly."
Cash hog prices were reported steady to weaker. Most pork processing plants have enough hogs booked to fill their slaughter schedules through Thursday and some are done buying for this week.
The USDA's pork carcass composite value, a measure of wholesale prices, on Friday rose 56 cents to $97.15 a hundred pounds.
The terminal markets traded steady to down 50 cents a hundred pounds with top prices from $63.50 to $65 a hundred pounds on a live basis.