U.S. hog futures were higher early in Friday's session amid short-position profit taking following two days of steep declines and expectations for cash prices to move higher into March.
In addition, easing of concerns about the recent surge in crude oil prices and impact on the economy overall fueled some speculative buying, a broker said. Stock prices are higher while crude oil prices are about flat, and that could serve as a relief value for livestock futures, said Rich Albaugh, analyst with Commodity Services Inc.
Others said the topping indications in oil prices and rebound in the stock market may result in more money flowing back into the agricultural commodities,
April lean hog futures at the Chicago Mercantile Exchange recently traded up 0.30 cent, or 0.3%, at 89.80 cents a pound. June, the second most-active month, was up 0.47 cent, or 0.5%, at $1.0100 a pound.
In the cash markets, some processors on Thursday paid considerably more for hogs purchased on a live weight basis, at premiums to the dressed markets, according to the U.S. Department of Agriculture's daily market reports. Nearly as many hogs were traded on a negotiated basis live from $56.31 to $66 with a weighted average at $64.35, up $2.08 from the previous day as were reported sold dressed. The volume of live sales Thursday was larger than all other days of the week combined.
The higher prices paid and volume of animals traded on a live basis Thursday indicated that some processors needed more hogs for next week and were forced to pay more for them. The live sales, however, do not affect the formula market agreements which determine prices received by producers for the larger number of dressed-based sales, analysts and livestock dealers said.
The high priced live sales Thursday contributed to early gains in futures, they said, and may be an indicator of where cash prices overall are headed next week.