Livestock futures closed higher on ideas of strong demand for meat spurred by a report Monday after the close that shows a larger-than-expected drawdown in meat in cold storage.
In the hogs market, traders pushed up futures prices in anticipation that a seasonal low for pork production could be in the offing. Typically, slaughter rates drop in the summer and hog prices can move about $15 higher per 100 pounds, said Don Roose, president of U.S. Commodities Inc.
But so far the slaughter for hogs has been breaking records and the U.S. Department of Agriculture is estimating an addition 5% increase in production number this year. Bullish traders in hogs are counting on recently strong exports of pork products to China to boost prices. Import data from China showed a 12.4% increase in March over the prior month and a 8.1% increase year-over-year for pork products.
A monthly report of meat stored in U.S. cold storage warehouses also gave the bulls a reason to run, with pork stocks down 10% year-over-year to 555.1 million pounds.
"We're getting seasonal buying, people are watching some of these demand numbers from the cold storage reports and China. The question is what happens with the slaughter," said Mr. Roose
Cash bids for hogs remained steady to lower, with the USDA estimate of this week's kill to date at 881,000 versus 854,000 for the same period last year.
CME lean hogs for May were up 1.3% at the close at 65.225 cents a pound.
Live cattle also rose on demand ideas, up 0.6% in the April contract at $1.29825 a pound, with the cold storage report showing 464.5 million pounds of beef in U.S. freezers, down 3.6% over the same time last year and the largest March drawdown in stocks in 14 years, according to Vetterkind Cattle Brokerage.
Short-term sales were light in the cash cattle market, with yesterday's news of steers selling at $125 to $129 live for cattle based off the June contract for delivery nearly a month out.
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(END) Dow Jones Newswires
April 25, 2017 15:55 ET (19:55 GMT)