Hog futures headed for the biggest gain in five weeks as pork prices reached a two-year high amid tight supplies. Cattle also climbed.
Wholesale-pork prices jumped 2.9 percent to 93.83 cents a pound yesterday, the highest level since Aug. 18, 2008, according to U.S. Department of Agriculture data. Pork production in the third quarter will fall 4.6 percent from a year ago, the USDA said today. Before today, futures climbed 15 percent this year.
“We’ve had really tight supplies,” said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago. “Good strength in the cash market yesterday” is also boosting prices, he said.
Hog futures for October settlement rose 1.625 cent, or 2.2 percent, to 77.15 cents a pound at 10:12 a.m. on the Chicago Mercantile Exchange. A close at that price would be the biggest gain for the most-active contract since June 9. Earlier, hogs reached 77.275 cents, the highest level since Aug. 5.
Pork-belly futures for February settlement fell 1 cent, or 1 percent, to $1.025 a pound.
Mexican Pork Tariffs
Mexico will impose a tariff of 5 percent on some cuts of pork, the nation’s official gazette said. The country is charging the duties on the meat and other U.S. imports from cheese to fruit after the U.S. government didn’t restore a program allowing Mexican trucks to operate north of the border.
“Obviously, it’s not going to stop pork shipments to Mexico,” Smith said. “It could slow it a little bit.”
At some point, the market may get concerned about the tariff because Mexico is “a big customer,” Smith said. Mexico imported $762 million of U.S. pork last year, the largest amount for any country except Japan, according to the U.S. National Pork Producers Council.
Cattle futures for October delivery rose 0.575 cent, or 0.6 percent, to 96.525 cents a pound. Before today, the most-active contract rose 11 percent this year. Feeder-cattle futures for October settlement gained 0.775 cent, or 0.7 percent, to $1.144 a pound.