Chicago | Reuters — Chicago Mercantile Exchange lean hog futures soared as much as three per cent on Monday in bull-spreading linked to hopes of stronger U.S. cash hog prices and fears of African swine fever spreading in top pork consumer China, traders said.
The gains came after China reported an African swine fever case on a farm with nearly 20,000 pigs, the largest farm yet to report the highly contagious disease.
“It seems like this African swine thing took a more serious twist this morning,” said Archer Financial analyst Dennis Smith. “That triggered a lot of buying.”
Traders have been closely tracking the swine fever outbreak for weeks, with some hopeful that a smaller herd in China may force buyers there to boost pork imports. The U.S. hog herd is the biggest ever and export demand is needed to prevent supplies from backing up in the domestic market.
Front-month December hogs jumped 1.75 cents, to 56.75 cents/lb., rising for the second straight session (all figures US$). February hogs were up 1.675 cents, to 63.9 cents.
Bullish traders were betting the December hog contract would rise to match the cash market. Hogs in the top cash market of Iowa and southern Minnesota were down 60 cents, to $59.98/cwt – equivalent to an over three-cent premium to futures, according to the U.S. Department of Agriculture.
Cattle futures, both live and feeder, were mostly higher in technical buying and rising wholesale beef prices.
CME November feeder cattle futures earlier dropped to a one-month low of 153.75 cents/lb., pressured by rising corn prices that raised costs for fattening cattle and threatened demand. But the contract rebounded, finishing up 0.6 cent at 155.225.
More actively traded December live cattle were up 1.8 cents at 117.975 cents/lb., also recovering from earlier declines.
With sales in U.S. cash cattle markets unlikely until later this week, traders looked to daily beef prices for demand clues.
Choice-grade boxed beef was up $1.48, to $204.19/cwt, USDA data showed.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.