Hog futures jumped to a two-month high Tuesday as traders continued build a seasonal premium into the market.
Futures traders are betting that rising pork prices, higher cash sales and large slaughter numbers are signs of strong demand ahead of holidays featuring meat such as Memorial Day.
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"Seasonal demand continues to pull us up," said Craig VanDyke, an analyst with advisory firm Top Third Ag Marketing. "Packers kill as much as they can because the demand is absorbing it."
Pork packers have consistently slaughtered over 2.2 million hogs a week over the past month, while pork prices have risen by around 15% in the past three weeks. Futures have rallied since hitting a multimonth low in mid-April, but selling in the cattle market has recently weighed on hog contracts.
Lean hog futures for June delivery rose 1.9% to 78.725 cents a pound on Tuesday at the Chicago Mercantile Exchange, the highest close since March 16.
Analysts say sky-high wholesale beef prices may further help demand by pushing consumers toward pork as the price difference trickles down to the retail level.
Cattle futures slid for the sixth consecutive session Tuesday, despite the continued rise of beef.
Analysts said live cattle futures were due for a correction after open interest rose to record levels in recent weeks.
CME June live cattle futures fell 0.5% to $1.219 a pound.
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(END) Dow Jones Newswires
May 16, 2017 15:14 ET (19:14 GMT)