Hog futures bounced more than 3% to a five-month high.
Cash prices for physical hogs rose steadily for three weeks on strong demand from meatpackers for pigs to fill new slaughterhouses. But the futures market was mixed, pressured by a series of factors such as uncertainty about the future of the North American Free Trade Agreement.
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Concerns last week about the U.S. pulling out of Nafta -- a major vehicle for U.S. pork exports -- prompted "fear-driven liquidation," said Arlan Suderman, chief commodities economist at INTL FCStone Inc., but traders on Tuesday turned their attention back to supportive supply-and-demand dynamics.
That helped spark a rally, as traders bet that the market still had ground to cover. February-dated lean hog futures rose 3.3% to 73.9 cents a pound at the Chicago Mercantile Exchange, closing at the highest point since Aug. 14.
But analysts said the cash market was showing signs of cooling. Physical hog prices fell 86 cents to $69.04 per 100 pounds on Friday, ending three consecutive weeks of higher prices, before rising again. Market observers said they expected prices to steady this week.
Wholesale pork prices were on track for a third consecutive day higher, rising 36 cents to $81.45 per 100 pounds as of midday Tuesday.
Cattle futures also rose. CME February live cattle contracts climbed 0.6% to $1.181 a pound.
The cash trade for cattle hadn't started as of Tuesday's session, and traders were watching to see which direction the market would take. Prices fell around $2 last week, averaging $119.94 per 100 pounds on a live basis and $191.73 dressed, according to the U.S. Department of Agriculture.
Analysts said some of the same factors that pressured the market last week, such as large supplies of slaughter-ready cattle, continue.
"We've just got a lot of cattle to kill right now," said Troy Vetterkind, owner of Vetterkind Cattle Brokerage.
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(END) Dow Jones Newswires
January 16, 2018 15:35 ET (20:35 GMT)