Chicago | Reuters — Chicago Mercantile Exchange (CME) lean hog futures surged three per cent on Thursday, setting life-of-contract highs on firming cash hog markets and rising wholesale pork prices, traders said.

CME April lean hog futures settled up 2.725 cents at 91.5 cents/lb. after recording a contract high at 91.7 cents (all figures US$).

“Packers are obviously competing for hogs,” said Dan Norcini, an independent livestock trader. “There seem to be fewer hogs around than the market had anticipated. It has forced some packers to pay up. And wholesale pork prices continue to rise; demand has been very strong,” Norcini said.

The U.S. Department of Agriculture reported the pork carcass cutout value on Thursday at $99.69/cwt, the highest since mid-October.

Export demand is one factor. USDA reported export sales of U.S. pork in the week to March 4 at 32,400 tonnes, with China the top buyer of 10,700 tonnes.

Traders also anticipate rising domestic demand for meat as the U.S. economy rebounds after the coronavirus pandemic.

This week’s hog slaughter pace has lagged a bit, further tightening pork supplies. USDA reported the week-to-date U.S. hog kill at 1,961,000 head, down from 1,968,000 in the same period a year ago.

In the cattle market, CME live cattle futures closed mixed, with the most-active April contract down 0.25 cent at 118.525 cents/lb. and the June up 0.7 cent at 119.675 cents.

The April contract was anchored by flat cash prices, with market-ready cattle trading at about $114/cwt for several weeks despite strong packer margins.

Strength in deferred cattle futures suggests that traders expect a pickup in beef demand in the coming months, while average cattle weights are declining, curbing beef supplies, Norcini said.

CME April feeder cattle futures ended down 0.45 cent at 141.275 cents/lb.

Traders were monitoring a snowstorm expected in the U.S. Plains over the next four days, bringing heavy snow and winds that could make transport and travel difficult.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.