Unlike cattle, lean hog futures rallied on renewed hopes for pork export sales to Japan. Reports that buyers were nosing around for packaged products to restock store shelves re-emphasized analyst estimates that pork would see a revived Japanese market before beef because of its relatively low price.
April, the front-month hog contract at the Chicago Mercantile Exchange, closed up 0.42 cent, or 0.51%, at 85.30 cents a pound. June, the leader among lean hogs in open interest, rose 0.60 cent, or 0.63%, and closed at 95.35 cents.
"Hogs rebounded on expectations that pork would benefit the most from a recovering Japanese market," Cronin said. Many analysts had predicted that pork would be the first product sought as buyers re-enter the market.
Tuesday's near limit-down day also realigned the futures market with cash prices, Cronin said. Previously, it was well above the cash market, and was considered to be a selling opportunity. However, Tuesday's drop erased that and brought in more buying as traders covered short positions and speculated on rising pork demand.
Cash hog markets currently are flat as supplies and demand are balanced. Supplies could tighten in the country, however, if export pork demand heated up, said Tom Cawthorne, broker for R.J. O'Brien.
South Korea and other export markets were unaffected by the earthquake and tsunami that rocked Japan, and these markets continue to be good customers. A resurgent Japanese market could tighten supplies again.
The USDA's pork carcass composite price declined Tuesday after rising the previous three days with the quote down $0.59 at $91.29.