Hog futures jumped more than 4% on Tuesday, extending a recent rally as traders bet the market was reaching a seasonal low.
Both cash prices for slaughter-ready hogs and wholesale pork prices have steadied recently after weeks of heavy losses, which dragged futures lower. Cash prices rose 87 cents to $48.61 per 100 pounds on Monday while pork prices rose 34 cents to $73.12 per 100 pounds on Tuesday.
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Hog futures started to rise last week after a U.S. Department of Agriculture report showed that the national hog-and-pig herd grew in line with expectations, albeit to a record. That report suggested that meatpackers would have an ample number of hogs with which to produce pork, analysts say, but traders are betting that export demand will be strong enough to absorb the extra supply.
October lean-hog futures rose 4.6% to 59.875 cents a pound at the Chicago Mercantile Exchange on Tuesday, even hitting their upper daily limit earlier in the session. The most-active December contract rose 0.2% to 62.075 cents a pound after starting the week with a rally.
The recent march higher in hog futures is attracting more participants to the market, with the number of outstanding contracts, or open interest, rising in recent sessions.
Cattle futures rose alongside the hog market on Tuesday, with wholesale beef prices also higher in the morning.
But the cattle market is facing supply pressures of its own, analysts say. Showlists of slaughter-ready cattle are larger this week, suggesting that cash prices will be under pressure as lager supplies give meatpackers more power to haggle for lower prices.
The online Fed Cattle Exchange auction on Wednesday morning typically kicks off the week's trade. Feedyards have listed 1,732 head of cattle for sale, up a little under 400 from a week earlier. Packers didn't buy any cattle at last week's auction, however.
CME October live cattle futures rose 1.2% to $1.091 a pound.
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(END) Dow Jones Newswires
October 03, 2017 15:53 ET (19:53 GMT)