Hog futures bounced to a multimonth high as traders responded to rising prices for physical pigs.
Cash prices for slaughter-ready hogs rose for two consecutive weeks to $63.79 per 100 pounds on Friday, with market observers expecting steady to higher prices again on Monday.
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The strength in the cash market was helped in part by freezing temperatures that disrupted the flow of hogs to slaughterhouses and made it harder for hogs to fatten as quickly. Analysts also pointed to a strong demand outlook for 2018, with wholesale pork prices also rising.
That helped spark a bounce in the futures trade for hogs. February-dated lean hog contracts rose 2.2% to 72.975 cents a pound at the Chicago Mercantile Exchange on Monday, closing at the highest point since August 14. Prices have mostly traded within a tight range since late December.
Cattle futures started the week under pressure, however. An unexpected drop in cash prices late last week prompted a selloff that carried into Monday, with CME February live cattle contracts down 1.7% to $1.17225 a pound. Cattle futures were trading at the lowest point since mid-December.
The bulk of last week's cash sales took place on Friday. Prices averaged $121.65 per 100 pounds on a live basis and $193.89 dressed, according to the U.S. Department of Agriculture. That was lower than a week earlier despite expectations through much of the week that prices would rise, prompting traders to get out of bullish positions in the futures market.
Wholesale beef prices rose over the course of last week, however, and were steady as of Monday morning. Observers said demand was likely to pick up further as the winter storm that disrupted daily life in a number of eastern cities passed.
"The weekend grocery business and beef clearance was good as shoppers return to normal activity after a severe bout of harsh weather," said Dennis Smith, a broker at Archer Financial Services.
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(END) Dow Jones Newswires
January 08, 2018 15:20 ET (20:20 GMT)