Chicago | Reuters — U.S. lean hog futures on the Chicago Mercantile Exchange gained on Friday on continued tight hog supplies that threaten to shrink available pork at a time when consumer demand remains strong.

“Hog supplies are still shrinking seasonally. Pork supplies are figuring to tighten up as well,” said Doug Houghton, technical analyst at Brock Capital Management, noting the fundamentals remain supportive for higher hog futures. “It looks like we’re starting a new upward move.”

CME most-active June lean hogs added three cents to 109.725 cents/lb., with life-of-contract highs set in contracts from July 2021 through April 2022 (all figures US$).

For the week, June hogs added four cents, a 3.8 per cent gain, climbing 19 of the last 20 weeks.

The lack of available hogs has pushed packer margins negative, with packers seeing a $20.10 loss per head on Friday, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.

Hog slaughter eased, with 470,000 head processed on Friday, down slightly from a week ago, but 2.403 million processed for the week.

Meanwhile, U.S. live cattle futures gained, while feeder cattle continued to fall as climbing corn futures translated to higher feed costs, traders said.

CME’s June live cattle futures added 0.525 cent to 116.575 cents/lb., while August feeder cattle futures lost 3.125 cents to close at 146.3 cents/lb.

For the week June live cattle gained 0.85 cent, while August feeder cattle lost 3.6 cents, a 2.4 per cent weekly loss.

“Because of the higher feed prices, people are still trying to move market-ready cattle supplies,” said Houghton. “Packers seem to have the upper hand still.”

Beef packer margins climbed to $651.10 per head, according to Hedgersedge.

Beef packer profitability is led by strong consumer demand, as choice beef cutouts added $2.74/cwt, to $296.50, while select cuts gained $3.26, to $283.05, according to the U.S. Department of Agriculture.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.