Speculators’ robust appetite for beef and pork has fueled an agricultural trading upswing at CME Group, the Chicago futures exchange operator.

Agriculture futures and options trading volume at CME jumped 11 percent during March and about 5.8 percent during the first quarter, compared with the corresponding periods in 2009, the exchange said in a report today.

CME’s expanding ag business is driven in part by record trading in cattle and hog futures, which hit multi-year highs last month as hedge funds, managed futures traders and other speculators piled into the markets. Milk futures trading also rose.

Speculators are keying off both fundamentals – primarily, prolonged contraction in U.S. cattle and pig herds – and “technicals,” or bullish price chart formations, Chicago-based analyst Jack Scoville said.

“The speculative side is the big long” in cattle and hog futures, said Scoville, who’s with Price Futures Group, Inc. Little appears to be in the way of even higher prices, Scoville said.

“Fundamentally, the lower numbers are driving the show,” Scoville said. “Fundamentals favor a strong market, until we start seeing hog and cattle numbers build back.”

In trading today, June lean hog futures rose 1.675 cents to 85.05 cents a pound, a record-high close for the carcass-based contract. June hogs are up 25 percent since the end of August.

“We’re hitting new highs (in hogs) so we should see a new influx of speculative money coming in,” Scoville said.

June live cattle rose 0.675 cents to 94.2 cents a pound, after reaching a contract high of 96.225 cents on March 19. The contract is up 11 percent since Dec. 1.

For the year through April 1, an average of 54,386 live cattle futures and options contracts changed hands each day, up 35 percent from the same period in 2009, CME said. March trading, at an average of 59,483 contracts a day, surged 46 percent.

In lean hog futures and options, trading averaged 32,679 contracts a day so far this year, up 10 percent. First-quarter trading in both markets reached all-time highs for any quarter, CME said.

Speculators’ heightened activity in livestock markets partly stems from a grain price slump that’s cooled interest in corn, soybean and wheat futures, said Paul Nelson, an analyst with EHedger, LLC, in Chicago.

“Bull markets always seem to gather more attention than bear markets,” Nelson said. Speculators “look for what’s moving and go to it.” Livestock, Nelson said, is “the flavor of the day.”

Trading in the CME’s dairy complex also increased, even though milk prices have tumbled this year. Milk futures and options trading averaged 2,127 contracts a day so far this year, up 24 percent.

During March, CME agricultural futures and options trading, including grains and dairy products, averaged about 685,518 contracts a day, up from 618,327 during the same month in 2009.

For the year through April 1, agricultural futures and options trading averaged 779,974 contracts, up from 737,063 during the same period in 2009.

For all CME products, including interest rate and energy contracts, trading so far this year is up 12.5 percent, to an average of 11.6 million contracts a day. Agricultural contracts account for about 6.7 percent of total CME trading.