Cattle futures jumped on Friday, extending an April rally as beef prices rise.
The April live cattle contract hit $1.38 a pound at the Chicago Mercantile Exchange before expiring, with the CME June contract gaining 2.1% to close at $1.24025 a pound.
Hedge funds have piled into cattle futures positions, with open interest soaring to record levels, on the back of optimism about plentiful demand for beef this summer. Funds have been taking cues from meatpackers, who paid as much as $1.40 a pound for cattle on the cash market this week.
April's rally has surprised analysts, many of whom expected a slump after beef prices peaked in late March. Now that the April contract has expired, the spread of as much as $16 between futures and cash prices means "anything can happen," said Troy Vetterkind, owner of Vetterkind Cattle Brokerage in Thorp, Wis.
"We've got a huge fund net long position and a red hot cash cattle market," Mr. Vetterkind said.
Hog futures also rose as traders solidified their bullish turn, hitting multiweek highs. The CME lean hog contract closed 1.6% higher at 74 cents a pound, the highest since March 16.
The cash market for hogs has started to tick higher this week after a protracted slump. Sales averaged at 55.97 cents a pound Thursday, with higher bids expected in Friday's trade.
After weeks of high slaughter numbers and pork production, analysts say meatpackers finally have to pay more for hogs as supplies tighten. That's cut into margins, which have slid this week, but market participants expect strong demand to carry the pork complex in the near term.
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(END) Dow Jones Newswires
April 28, 2017 15:35 ET (19:35 GMT)