Lean hog futures ended mostly higher Tuesday with nearby contracts lifted by flat to firm cash prices and expectations for pork exports to remain on a record setting pace.
A late surge in investor buying took cattle futures higher at the close of pit trading.
April, the front month hog contract at the Chicago Mercantile Exchange, hit a 1 1/2-week high and closed up 1.30 cents at 89.70 cents. Most-actively traded June was up 0.47 cent, or 0.5%, at $1.0145 a pound as it also posted a 1 1/2-week high.
A turnaround in live cattle from lower early to mostly higher later contributed to the gains in the nearby hog contracts, a broker said. Meanwhile, gains in the late summer and fall hog contracts were capped by hedge selling and profit-taking as some long position holders sold following the recent rally to new highs in some contracts.
The late summer and fall hog delivery months had their gains limited by hedge selling and profit taking by investors holding long positions following recent strong gains.
A seasonal tightening of supplies has the cash market working higher, aided by prospects for expanded pork exports, brokers and analysts said.
Wholesale pork prices are working higher as well and are expected to continue climbing ahead of the summer grilling season, said Don Roose, analyst with U.S. Commodities. The U.S. Department of Agriculture's pork carcass composite value on Monday was $92.69 per hundred pounds and was expected to move up to around $98 to $99 by early summer, he said.
Reports of growing concerns in Japan about radioactive contamination in more foods and across wider distances from the severely damaged nuclear power plants led to speculation among traders that Japan may purchase even more U.S. pork. Japan is the largest international customer for U.S. pork in terms of dollars, accounting for 34% of the U.S. total in 2010, according to USDA data.
Cash hog prices were flat to higher on increased buying interest for later in the week. Seasonal tightening of supplies may be causing some plants to become more aggressive about seeking additional loads to fill their slaughter schedules, said livestock dealers and market managers.
Early projections for the weekend slaughter are mostly from 40,000 to 45,000 head, down from recent weeks. The weekly total is on pace to be around 2.115 million to 2.120 million head, down about 3.2% from a year ago.