U.S. hog futures were mostly modestly higher in early trading Monday, supported by higher wholesale pork prices Friday and optimism for pork exports to remain strong.
April, the front month futures contract for lean hogs futures at the Chicago Mercantile Exchange recently traded 0.22 cent higher, or 0.3%, at 88.55 cents a pound. June hog futures, the most active contract, was last up 0.57 cent, or 0.6%, at $1.0040 and hit a 1 1/2-week high.
Strength in stock prices, corn and live cattle futures contributed to the gains in lean hogs as investors were buying across multiple commodity sectors. In addition, there is speculation that Japan may buy additional U.S. pork due to food safety concerns for meat coming from its own production units in northern areas of the country where radiation contamination may have occurred.
Seasonal strength in wholesale pork prices is expected by mid April, supportive for the late spring and summer lean hog contracts, analysts said.
After the market rallied late last week from multi-week lows hit Thursday, some brokers and analysts predict more modest gains are likely Monday. If the market moves up further in the summer months, that might generate some hedge selling among hog producers, said Ken Jolliffe, analyst with BIS Commodities. Prices pushed up through $1 a pound in June through August, a level where some producers may want to lock in prices for additional loads after the recent slide.
Wholesale pork prices Friday advanced $0.50 to $92.56 per hundred pounds, the highest since Aug. 30. Recent strength in beef prices make pork look more reasonably valued, analysts said. Beef prices declined slightly but were higher for the week.
The cash hog markets were expected to trade generally flat to begin the week as most of the plants are said to have adequate inventories through the middle of the week. Some processors may need additional loads for later in the week, and they may have to pay a little more to secure the hogs, said livestock dealers and market managers.
The terminal hog markets were expected to be mostly flat with highs expected around $56 on a live basis.