U.S. lean hog futures traded narrowly mixed to begin the week as traders were cautious following a decline in wholesale pork prices Friday but offset but a firmer outlook for cash prices.
April, the front month futures contract for lean hogs futures at the Chicago Mercantile Exchange, was recently off 0.32 cent, or 0.3% at 93.90 cents a pound. June hog futures, the most active contract, was up 0.02 cent at 1.0360 cents.
Some traders sold April hogs due to concerns that ham demand for the Easter holiday later in the month may not be as brisk as had been hoped, said Tom Cawthorne, vice president and lean hog trader with R.J. O'Brien. On Friday, the U.S. Department of Agriculture's pork carcass composite report showed fresh ham prices sharply lower for the overall primal value, considered disappointing to some traders with nearly three more weeks remaining before the holiday. If ham prices do not hold up, that could weigh on the overall carcass value and limit packer demand for hogs.
The economic outlook is somewhat improved and stock prices are higher, which may help underpin lean hog futures as well, said Rich Nelson, director of research with Allendale Inc.
More people employed should result in better domestic demand for meats overall. As family incomes improve, they may purchase more of the higher priced cuts, which could boost pork wholesale prices overall. That should push up hog prices as well on stronger demand for the animals, analysts and brokers said.
Further strength in corn prices also are supportive for lean hog futures. Higher feed costs will keep producers from expanding their herds and may cause some operations to reduce the number of sows to be bred as producers' projected margins tighten or turn negative.
Meanwhile, after USDA's national weighted average hog price Friday hit a new record high, cash hog prices are expected to move up further. Supplies of slaughter-ready animals for this week are seen tighter, which could force packers to compete more aggressively for the animals that are available.
The terminal hog markets were expected to trade flat to $1 per hundredweight higher.