CHICAGO, Oct 16 (Reuters) – U.S. lean hog futures rose to a two-month high on Monday as cash prices extended their climb on strong demand from the expanded pork processing sector, traders and analysts said.
Two new hog slaughterhouses that opened about a month ago in Iowa and Michigan have boosted hog demand while wholesale pork prices have recovered from recent multimonth lows, suggesting consumer interest in pork was keeping pace with increased supplies.
“We beat hogs down pretty good and they’ve leveled out,” said Matthew Wiegand, broker at FuturesOne. “There’s a couple of new (pork) plants that, even if they aren’t running at full capacity, are keeping the finishing floor a little more current here.
Chicago Mercantile Exchange December lean hogs settled up 1.500 cents to 63.700 cents per pound, highest since Aug. 16.
Hogs in the top cash market of Iowa and southern Minnesota were $1.02 higher at $59.35 per cwt, according to the U.S. Department of Agriculture. The CME Group’s index of the cash hog market reached 59.51, highest since Sept. 20.
CME live cattle and feeder cattle futures were each narrowly lower in mostly technically-driven trade as dealers awaited sales in U.S. cash cattle markets as well as a monthly USDA Cattle on Feed report due on Friday.
Most-active CME December live cattle eased 0.300 cent to 116.825 cents per pound, finding support near its 10-day moving average and hovering above Friday’s low of 116.500.
The contract lost ground most of last week as prices eased from a multimonth high reached on Oct. 11.
USDA on Friday will state how many cattle were placed in feedlots for fattening last month in a report that gives cues to traders on how many animals will likely reach slaughter weight and be available to beef packers early in 2018.
“It’s a wait-and-see here,” Wiegand said of trading cattle futures ahead of the Friday report. “If the report is not wildly friendly, we’ll probably have a short-term pullback.
CME November feeder cattle futures fell 0.450 cent to 154.550 cents per pound but finished well above Friday’s 10-day low of 153.125 cents.
Feeder steers traded at prices steady to up $2 per cwt at the closely tracked weekly cash auction in Oklahoma City, the USDA said.