CME Group agricultural trading jumped more than 11 percent in April, fueled in part by bull markets in beef and pork that have had speculators pouring into cattle and hog futures.
Agriculture futures and options trading averaged 890,202 contracts a day during April, up from 799,147 during the same month in 2009, CME, the Chicago-based exchange operator, said in a statement today.
Among specific CME markets, trading rose 31 percent in cattle, 6.4 percent in hogs and 13 percent in milk, compared with April 2009.
Livestock futures trading surged this year as cattle and hog prices rallied, reflecting widespread herd reductions that cut availability of slaughter-ready animals and forced meatpackers to bid more aggressively.
The rallies have attracted buying from managed futures funds and other speculators who in recent years have targeted corn, crude oil and other commodities.
“If you’re a trend-following trader, there’s nothing to indicate to you to get out” of cattle and hog markets, said Paul Nelson, a livestock analyst with EHedger, LLC in Chicago. Trading is growing “because there’s expectations the market is going to trade higher.”
CME lean hog futures prices have doubled since August as animal inventories shrunk. In trading today, June lean hogs fell 0.175 cent to 86.75 cents a pound. The CME contract is based on carcass prices.
June live cattle today rose 0.5 cent to 96.025 cents a pound, after reaching a contract high at 96.6 cents. The contract is up 9.5 percent this year.
Rising prices also reflect improving prospects for beef and pork demand as the economy recovers from recession, Nelson said. Signs of improving restaurant business, which comprises a major portion of demand for beef, pork and cheese, has contributed to bullish sentiment.
Trading growth in the CME’s live cattle and feeder cattle contracts so far this year outpaced all but a few of the exchange’s 30-plus agricultural products, which include soybeans, sugar and wheat.
An average of 45,892 live cattle futures and options contracts traded each day last month, up from 35,050 in April 2009, according to CME data. Live cattle trading during the first four months of 2010 averaged 52,134 contracts a day, up 29 percent.
Lean hog futures and options trading averaged 28,267 contracts a day during April, up from 26,567 the same month a year earlier.
Trading in Class III milk, an industry benchmark, averaged 1,458 contracts a day in April, compared with 1,290 a year earlier.
The rise in milk trading probably reflects recent price increases in byproducts, including butter and whey, Nelson said. That’s stirred sentiment that milk prices may have bottomed following a slump early this year.
“People are starting to believe we’re at or near a low in milk futures,” Nelson said.
For all CME products, including contracts based on 30-year Treasury bonds and the Standard & Poor’s 500 index, trading for the first four months this year rose almost 14 percent, to an average of 11.7 million contracts a day.
Agricultural contracts account for about 7 percent of total CME trading.