Hog futures rose to the highest close in a month on Wednesday, as traders shrugged off concerns about oversupply.
Meatpackers are slaughtering record numbers of hogs, while producers have also increased herd sizes to an all-time high for this time of year. But traders are betting that strong demand for pork, both domestically and in the export market, will help absorb that extra meat supply and prevent a glut.
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Prices across the hog market have recently started to trend higher as a result. Meatpackers have increased bids for slaughter-ready hogs for eight consecutive trading days. On Tuesday, packers paid an average of $55 per 100 pounds, up over $1.50 from a day earlier, and were expected to bid more on Wednesday too.
Wholesale pork prices were also higher, rising above $74 per 100 pounds at midday Wednesday.
That has helped spark a series of rallies in the futures market, with hog contracts up over 10% from a low two weeks ago. October lean hog futures at the Chicago Mercantile Exchange rose 1.8% to 61.25 cents a pound, the highest close since Sept. 11.
Cattle futures were mixed Wednesday. The market rallied Tuesday in part on rumors of cash trade that proved to be unfounded, analysts said, prompting a slowdown on Wednesday. CME October live cattle futures rose 0.1% to $1.13775 a pound, while contracts for latter months fell.
Feedyards didn't sell any cattle at the online Fed Cattle Exchange auction Wednesday morning, passing up bids from meatpackers of between $110 and $110.75 per 100 pounds live. Those would have been steady to above last week's highs.
"That suggests that we could see this week's negotiated market come in at even higher values," said Arlan Suderman, chief commodities economist at INTL FCStone Inc.
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(END) Dow Jones Newswires
October 11, 2017 15:45 ET (19:45 GMT)