U.S. hog futures were higher in all contracts early Tuesday on cash strength and expectations for strong world demand to prop up prices throughout the year.
Nearby contracts April and June hit fresh multi-week highs while some others including July and August posted new individual contract highs.
April, the front month futures contract for lean hogs futures at the Chicago Mercantile Exchange, was recently up 0.60 cent, or 0.7%, at 93.20 cents a pound. June hog futures, the most active contract, was last up 0.70 cent, or 0.7%, at $1.0395.
Hog prices are expected to reach a new record high this spring and set additional highs through early summer. The season's peak could also be the highest hog prices for the next several years, especially if corn and soybean shortages are reduced somewhat by favorable growing conditions, said Chris Hurt, agricultural economist at Purdue University in his latest market outlook. However, if the corn crop is reduced by poor growing conditions, feed prices would surge which could result in further reduction of the hog herd this fall, he said.
The record high for daily hog prices as reported by the U.S. Department of Agriculture's national weighted average price is $87.41 per hundred pounds set on Aug. 8, 2008. Monday's national weighted average price was $84.02, a 10 1/2-month high. Based on current cash and futures prices, the current record for cash prices may be beaten within the next week or two and the seasonal advance into early summer is still to come.
Tighter world supplies of pork due in large part to high feed costs along with growing demand for meats from developing nations are expected to keep U.S. pork exports strong. Hurt said the demand factors are more important to hog prices currently than is supply. Those factors include strong growth in export demand, the continued economic recovery in the U.S., and inflation in commodities. However, if consumers resist paying the higher prices and should the government's monetary policy tighten this summer, demand could turn slower and bring prices down, he said. Hurt recommends that producers consider larger hedging positions this spring.
In the cash markets, prices are expected to be flat to higher for additional loads to arrive to processing plants later this week. Competition for the animals that are available has heated up in recent days since supplies appear to be tightening, said livestock dealers and market managers.
Wholesale pork prices Monday advanced $0.68 to $94.21, nearly a seven-month high. The record high for the pork carcass composite price is $96.74 hit on Aug. 24, 2010.
The terminal hog markets were expected to trade flat to higher with tops seen from $58 to $60.50 per hundred pounds on a live basis.