U.S. lean hog futures were lower in most contracts in early trading Tuesday, pressured by a broad selloff in other commodity sectors and profit taking.
The exception was spot April, which traded modestly higher ahead of its expiration on Thursday and supported by a mostly flat outlook for cash prices.
April lean hogs last traded up 0.30 cent, or 0.3% at 93.55 cents a pound. June hog futures, the most active contract, was down 1.35 cents, or 1.3%, at 99.75 a pound and hit a 3 1/2-week low.
Some traders are selling the premiums that have been built into the summer and fall contracts, brokers said. Concerns about consumer resistance to escalating retail prices, especially with gasoline prices moving up near $4 a gallon in many areas as well, added pressure.
Retail price points for most meat products have been climbing but still lag behind the larger increases that have occurred at the wholesale level. The premiums in summer futures prices point to more advances in wholesale pork prices.
The year-to-date increase in the U.S. Department of Agriculture's pork carcass composite value through last week was 23.2%. The consumer price index for pork products through February, the latest data available, was up 8.9% from a year ago, according to the Bureau of Labor Statistics.
There has been stiff competition for consumers' food dollars from the chicken sector, said Rich Nelson, director of research with Allendale Inc. Consumers may opt for a cheaper product within the same category or switch to another protein group, and chicken sales have benefited from price advances in the other meats.
Some accounts were selling to exit long positions following Monday's stalled rally attempt, a broker said. Some cautious views about the economic recovery and uncertainty about possible spillover from declines in other commodity sectors also weighed on lean hog futures.
The U.S. Department of Agriculture reported its pork carcass composite value Monday nearly unchanged at $94.59.
Early calls for cash prices Tuesday were mostly flat. Some processors likely need additional loads to fill their slaughter schedules for later in the week but may try to hold the line on prices since their margins have recently tightened.
The terminal markets were expected to trade generally flat with top prices seen from $61 to $64 per hundred pounds on a live basis.