Hog futures rose to a two-week high on speculation that U.S. retail pork demand is increasing after wholesale prices slid to a two-month low. Cattle also gained.
Wholesale pork was little changed yesterday at 82.76 cents a pound after slipping the previous day to the lowest level since April 14, U.S. Department of Agriculture data show. Meatpackers shipped 5.34 million pounds of pork yesterday, the most in two weeks.
“We saw down movement on product prices, but we followed it up with very good movement of pork,” said Chad Henderson, a market analyst at Prime Agricultural Consultants Inc. in Brookfield, Wisconsin. “We’re finding a little more demand now, especially with prices” at current levels, he said.
Hog futures for August settlement climbed 0.75 cent, or 0.9 percent, to 83.125 cents a pound on the Chicago Mercantile Exchange. Earlier, futures touched 83.225 cents, the highest price for a most-active contract since June 1.
Hog prices also rose after the USDA said yesterday it will spend up to $14 million on chicken for federal food programs. The plan is aimed at boosting chicken prices, which may cause some consumers to switch to pork, said Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois.
The government purchase “may help out by alleviating some of the backlog of chicken that might be stuck at the grocery stores,” he said.
Cattle futures for August delivery rose 0.575 cent, or 0.6 percent, to 89.175 cents a pound. Earlier, the price touched 89.2 cents, the highest level for a most-active contract since June 4. Feeder-cattle futures for August settlement fell 0.075 cent to $1.109 a pound.
Cattle were supported by rising wholesale choice-beef prices, Nelson said. Beef has gained 0.8 percent in the past two days, reaching $1.5435 a pound at midday, after plunging 9.5 percent in the previous four weeks.
A report of increasing feedlot supplies may still keep futures from rising, Nelson said. U.S. feedlots may have boosted purchases of young cattle by 23 percent in May from a year earlier, according to the average estimate of 12 analysts surveyed by Bloomberg News. The USDA will release monthly feedlot inventories on June 18.
The report “should be viewed as bearish for the long term,” Nelson said. Most cattle placed onto feedlots in May will be ready for slaughter from September until January, he said.