Hog futures rose Tuesday after pork prices were higher for the first time in almost two weeks.
Wholesale pork prices ended Monday up 33 cents to $78.09 per 100 pounds, halting eight consecutive trading days of decline. That encouraged traders to unwind negative bets on Chicago Mercantile Exchange lean hog futures, said Rich Nelson, chief strategist at brokerage Allendale Inc., particularly in the deferred December contract.
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CME October lean hog futures rose 0.2% to 60.125 cents a pound, while December futures rose 2.9% to 59.725 cents.
Concerns about oversupply continue to pressure the market, however. Wholesale pork prices resumed their slump on Tuesday, with prices lower again in the morning. Cash hog prices, meanwhile, were expected lower after falling for over two consecutive weeks.
Two packing houses that opened in September are expected to bolster longer-term hog prices as meatpackers compete for supplies given the added capacity. But they could end up further depressing the market if farmers end up raising larger herds, Mr. Nelson said.
"My concern is that our overall retail pork prices will continue to fall," he said.
Cattle futures also rose. CME October live cattle futures climbed 0.4% to $1.07975 a pound.
Wholesale beef prices also rose on Monday, while average cash cattle prices last week were higher than a week earlier. Tighter showlists of slaughter-ready cattle have sparked bets in the futures market that meatpackers will need to pay steady-to-higher cash prices again this week to secure supply.
Feeder cattle futures for September, meanwhile, rose 0.5% to $1.51575 a pound, the highest close in a little under two months. Traders are betting that the rate of cattle placed in feedlots for fattening is slowing, allowing the number of slaughter-ready cattle to ease in the coming months.
Analysts surveyed by The Wall Street Journal expect the U.S. Department of Agriculture to show cattle placements in August falling to 97% of year-ago levels. The rate of cattle marketed, or sent to slaughterhouses, is expected at 106% compared with a year earlier. Analysts expect the agency to put the total number of cattle on-feed as of Sept. 1 at 103% of the 2016 figure.
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(END) Dow Jones Newswires
September 19, 2017 15:25 ET (19:25 GMT)