CHICAGO, Dec 27 (Reuters) – U.S. lean hogs jumped on Tuesday, rebounding from last week’s steep losses on the back of higher wholesale pork prices and investment fund buying in many commodities from crude oil to corn, traders and analysts said.
Most-active Chicago Mercantile Exchange February lean hogs settled 1.550 cents, or about 2.1 percent, higher at 64.750 cents per lb. The contract gained on deferred months such as April hogs, which rose 0.900 cent to 66.775.
A U.S. Department of Agriculture report released on Friday showed the U.S. hog herd larger-than-expected at 71.5 million hogs, suggesting bigger supplies next year and triggering a sell-off in futures on Friday.
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“It doesn’t really make sense with what the report said,” Rosenthal Collins hog broker James Burns said of Tuesday’s rally. “The February was driving the market. It sure seemed like it was some type of index fund buying as the year starts to wind down.”
Hogs rebounded after USDA data at midday showed higher pork prices. The wholesale cutout was up $1.09 to $82.06 per cwt, led by sharp gains in pork belly and pork butt cuts, USDA said.
Wholesale choice-grade beef was up 27 cents at $198.54 per cwt, USDA said.
CME February live cattle finished 0.300 cent lower at 116.000 cents per lb and CME January feeder cattle were down 0.775 cent at 129.950 cents per lb.
Each cattle contract declined in the wake of last week’s USDA Cattle on Feed showing larger-than-expected numbers in U.S. feedlots.
Feeders were further pressured by higher prices for corn, which boost costs for feedlots fattening cattle for slaughter.
Chicago Board of Trade corn futures hit a one-week high, boosted in part by end-of-year buying.
Separate USDA data released on Friday showed smaller-than-expected stockpiles of both beef and pork in U.S. cold storage, which supported cattle and hog futures when trade resumed on Tuesday, Global Commodity Analytics analyst Mike Zuzolo said.
“The cold storage data seemed to mean a lot more to the trade than they normally do,” Zuzolo said.
USDA said 531.5 million lbs of beef was in U.S. freezers in November, down from analysts’ average estimate of 544.6 million lbs. For pork, 520.3 million lbs was in freezers last month, below the average estimate of 566.1 million lbs.
