U.S. lean hog futures settled higher Tuesday, boosted by declining supplies and expectations for rising demand amid firm exports and improved grilling weather.
Cattle futures ended mixed, with recent declines in wholesale prices expected to increase demand. The market, however, remains under pressure as supplies of slaughter-ready cattle increase near term.
June hog futures rose 0.82 cent, or 0.9%, to 93.47 cents a pound, while the July contract climbed 0.67 cent, or 0.7%, to 93.87 cents a pound. The May contract fell 0.67 cent, or 0.7%, to 92.05 cents a pound in light volume ahead of expiration Friday.
Hog futures drew support from tightening supplies and the view that demand for meat products is firming ahead of summer.
"Hogs are showing a little strength," said Steve Wagner, an analyst with Country Hedging. "You've got better demand in the export corridor for hogs than for cattle, and we aren't seeing expansion in supply."
Some traders also were buying on the expectation the Memorial Day holiday at the end of the month will fuel pork demand as outdoor grilling increases after a slow start, market participants said.
Yet pork prices are still at risk for further declines, analysts say, as high gasoline prices may limit consumer spending and cheaper alternatives such as chicken may become more attractive.
The cash hog markets showed mixed signals. Early bids were reported flat to weaker with most pork processors having nearly enough animals booked for the week's reduced slaughter schedules. Thin margins and lackluster demand have been causing buyers to bid cautiously for additional animals. There is speculation, however, further tightening of supplies next week and improved demand for later in the month could support cash prices.
Terminal markets traded steady with top prices from $61 to $62 per hundred pounds on a live basis.
The latest Dow Jones Newswires pork packer margin index was minus 64 cents per head, compared with minus 40 cents the previous day.
The U.S. Department of Agriculture's pork carcass composite value, a measure of wholesale prices, for Monday was $90.91 per hundred pounds, up 47 cents. The increase ended a string of five consecutive days of declines.