Hog futures rose to an eight-week high as meatpackers continued to drive up cash prices for slaughter-ready pigs.
Two slaughter houses that opened in Iowa and Michigan in September have added to national processing capacity, forcing packers to pay more in order to secure supply for their plants.
Continue Reading Below
"Adding two new players has actually spurred competition," said Dennis Smith, a broker at Archer Financial Services. "This is something we knew in theory should occur but we weren't sure it would actually would happen."
Lean hog futures for December rose 0.8%, to 64.25 cents a pound, at the Chicago Mercantile Exchange, the highest close since Aug. 21.
Cash prices, meanwhile, rose over $2, to $62.40 per 100 pounds on Wednesday, and were expected to rise as much as another dollar on Thursday.
Analysts say demand for pork needs to improve going forward in order to sustain higher cash prices. The U.S. Department of Agriculture said that exporters sold 11,400 metric tons of pork in 2017, down from recent weeks. Wholesale pork prices have slumped this week.
Cattle futures were mixed. CME October live cattle futures fell 0.3%, to $1.112 a pound. The most-active December contract was also lower, while later months rose.
Around 4,000 head of cattle traded in the cash market on Wednesday for an average of $109.75 per 100 pounds. That was below last week, and traders were looking to see whether prices would track higher for the remainder of the week.
Market participants were looking ahead to a monthly government report on Friday afternoon, which they expect to show growing supplies of cattle being fattened for slaughter.
Write to Benjamin Parkin at email@example.com
(END) Dow Jones Newswires
October 19, 2017 15:55 ET (19:55 GMT)