Chicago | Reuters — U.S. lean hog futures extended gains to a fresh seven-month high on Thursday, lifted by strong pork packer demand, while cattle futures also climbed in a short-covering rebound from Wednesday’s multiweek lows, traders and analysts said.
Traders continued to bull-spread Chicago Mercantile Exchange lean hogs, with the front-month February contract hitting a lifetime high of 70.5 cents, before settling 0.925 cent higher at 70.35 cents/lb. (all figures US$).
The continuous hog chart reached its highest level since July 28 while the most-active April hog contract finished 0.475 cent higher at 69.575 cents.
The U.S. Department of Agriculture said hogs in the top Iowa and southern Minnesota market were 99 cents higher at $68.79/cwt. Packers could earn an average of $26.55 for each hog they slaughtered, down slightly from $31 per head a week ago, according to advisory HedgersEdge LLC.
“There’s clearly demand on the front end of this market,” said CHS Hedging analyst Steve Wagner. “The margins are strong and the packers are making good money. Why would they walk away from it?”
Wagner said prices were due for a correction but lean hog futures could remain firm as retailers begin to stock up on hams ahead of the Easter holiday on April 16.
Wholesale ham prices were hovering near the lowest levels in about two weeks while pork belly cuts were the highest since August 2015, according to USDA data.
CME live and feeder cattle futures each gained about one per cent as traders took profits on earlier short bets tied to expectations for weaker trades in U.S. Plains cash cattle markets.
CME April live cattle futures were up 1.775 cents to 115.475 cents/lb. and CME March feeder cattle rose 1.675 cents to 123.75 cents/lb.
Cattle had drifted lower for much of this week on pressure from USDA reports showing larger cattle and beef supplies, and as cash cattle prices declined on Wednesday at the online Fed Cattle Exchange auction.
Cash cattle on Thursday traded lightly in Texas and Kansas at $119/cwt, down from mostly $122/cwt last week, feedlot sources said.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.