CHICAGO, Dec 1 (Reuters) – U.S. lean hog futures surged as much as five percent on Tuesday to the highest levels in three weeks, lifted by expectations that slower pork production next year will boost animal and meat prices, traders said.
Live and feeder cattle futures also were higher at the Chicago Mercantile Exchange, reversing earlier losses on better demand from retailers for beef and pork for featuring during the holiday season.
Some investors took profits on short positions while commercial livestock operations also extended long bets on ideas that cattle and hog prices may be nearing short-term bottoms after steep losses in November, the traders said.
“We still have a lot more hogs than we did last year, but there’s some thinking that we’ve moved past the largest (hog) supplies for the season, and supplies are starting to taper,” said independent livestock futures trader Dan Norcini.
Most-active February lean hogs settled 2.975 cents higher at 59.775 cents per lb. Earlier, the contract rose by the 3.000 cents per lb daily price limit while the session gains of 5.3 percent were the largest in the lifetime on the contract.
Wholesale pork prices are the highest in about two weeks while prices for hams, which are expected to be featured prominently in grocery advertisements in December, were at the highest in more than a month, U.S. Department of Agriculture data showed.
Live and feeder cattle futures each rose more than 1 percent, with some traders optimistic for higher cash prices this week after harsh winter storms slowed movement of animals to slaughterhouses last week.
However, herds were slowly expanding and supplies of beef were larger than a year ago, likely limiting potential gains in cattle prices.
Most-active February live cattle finished 2.275 cents higher at 134.625 cents per lb and January feeder cattle up 1.650 cents at 164.400 cents per lb.
