U.S. live cattle and lean hog futures closed mostly lower Thursday as traders were more cautious amid concerns about the economy and widespread selloffs in commodities and stock prices.
The front-month contracts in each of the two categories managed to close higher, however, supported by cash direction this week and strong exports so far in 2011.
Demand concerns and spillover from declines in most other commodity sectors weighed on lean hog futures as well, which, with the exception of front-month April, ended lower.
April hogs were up 0.10 cent at 89.85 cents a pound but June was off 0.50 cent, or 0.5%, at $1.0145 a pound.
Improved world demand for meats and tightened supplies overall helped to underpin the April hog contract, a broker said. Pork exports are forecast to exceed a year ago by nearly 11% and account for nearly 20% of U.S. production, trimming the amount of product left for the domestic market. Worldwide pork supplies are tight, and high grain prices drive up the cost of producing hogs elsewhere, analysts said. Even with corn around $7 a bushel and hog prices moving toward record highs this summer, purchasing U.S. pork would be less expensive for most trading partners than if they buy the feed and produce the hogs.
The summer and more-distantly traded contracts were lower, though, pressured by traders' concerns about whether consumers will be willing or able to pay potentially sharply higher prices for pork in the months ahead.
During a conference call early Thursday, Smithfield Foods Inc. (SFD) Chairman Larry Pope said that, as rising wholesale prices are passed on to consumers, there could be some switching of protein options among beef, pork and chicken based on price. Chicken is the cheapest of the three overall.
In the cash markets, pork processors in the western corn belt were bidding mostly flat prices for loads to arrive next week while some plants in the east were quoting $0.50 to $1 higher. Prices advanced in the west earlier in the week, widening the spread, or difference, between the quoted prices there and in the east, said livestock dealers and market managers. That caused some buyers in plants east of the Mississippi River to boost their bids to catch up and remain competitive.
Projections for Saturday's slaughter remain around 75,000 head, with the week's total expected to be in the area of 2.155 million, up nearly 1% from a year ago.