Record-high pork prices drive up U.S. hog futures

Chicago Mercantile Exchange hog futures climbed on Thursday as pork prices remained historically high, traders and analysts said.

Thursday morning’s U.S. Department of Agriculture mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at US$110.78 per hundredweight (cwt).

The price slipped from Wednesday’s all-time high of $111.33/cwt but stayed above the previous $110.19 record set on Aug. 8, 2011 (all figures US$).

Pork values rose for four straight days largely due to surging prices for pork bellies, which are processed into bacon, analysts said. They said fast-food franchises, supermarkets and restaurateurs competed for product at higher costs.

“It’s all about the bellies this time of year,” independent hog futures trader Bill Cipolla said.

Pork gained favor with consumers after beef prices spiked to record highs last month.

Also, packers cut slaughter rates to offset tighter-than-expected seasonal hog supplies. Those cutbacks reduced the flow of pork to end-users at a time when demand heats up for summer vacations and outdoor cookouts.

Analysts see pork values peaking as grocers fill meat orders for U.S. Independence Day holiday demand. In anticipation, packers lowered bids for market-ready hogs.

USDA data showed the average hog price on Thursday morning in the most-watched Iowa/Minnesota market at $98.81/cwt, down 74 cents from Wednesday.

Investors await the government’s quarterly hog report on Friday at 2 p.m. CT.

Analysts expect the report to show the U.S. hog herd likely grew slightly in the March-May quarter due to cheaper feed.

CME July hogs settled up 2.025 cents per pound at 101.975 cents. They posted a new contract high of 102.2 cents in after-hours trading.

August closed at 99.4 cents, or 1.75 cents higher and peaked at its highest level in almost seven months.

Most live cattle up with funds

Fund buying and short-covering before the last trading day of the quarter landed most CME live cattle in positive territory, analysts and traders said.

Spread traders sold spot June and bought deferred futures before the spot month expires on Friday. The spreads lifted August beyond the 100-day moving average of 122.49 cents, which triggered fund buying.

Spot June settled down 0.125 cent/lb. at 121.15 cents.

Most-actively traded August closed 0.75 cent higher, at 122.925 cents. October finished at 126.175 cents, or 0.775 cent higher.

Investors waited for this week’s cash cattle trade.

Cash bids in Texas and Kansas stood at $117/cwt, with no asking prices reported by feedlot
sources. Cash cattle last week moved at $120/cwt.

Thursday morning’s beef cutout rebound and fewer cattle for sale were supportive for cash.

The government’s Thursday morning data showed the wholesale price of choice beef, or cutout, at $197.59/cwt, $1.08 higher than on Wednesday. Select cuts rose 97 cents to $187.48.

But packing plants will be closed at least one day over the July 4 holiday period, limiting their need for supplies.

Higher CME live cattle and fund buying pushed feeder cattle futures to a 5-1/2-month high.

August settled up 0.775 cent/lb. at 149.7 cents. September was at 151.825 cents, 0.8 cent higher.

— Theopolis Waters reports for Reuters from Chicago.

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