June 21 (Bloomberg) -- Hog futures rose to a five-week high on speculation that U.S. pork exports will increase after China, the world’s largest consumer, ended its currency peg to the dollar. Cattle also gained.
China’s yuan jumped the most since 2005. The peg was adopted two years ago during the global financial crisis to protect exporters. China was the fourth-largest buyer of U.S. pork last year. The Reuters/Jefferies CRB Index of 19 raw materials climbed to a five-week high today on bets that the global economy will expand.
“This will give the Chinese more purchasing power with their currency,” said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago. Meat prices “are going to benefit greatly from the reversal in economics,” he said.
Hog futures for August settlement climbed 1.7 cents, or 2.1 percent, to 84.35 cents a pound on the Chicago Mercantile Exchange. Earlier, the price reached 84.65 cents, the highest level for a most-active contract since May 14. The commodity has jumped 29 percent this year.
U.S. wholesale-pork prices rose 3 percent in the past two sessions, boosting hog futures, Smith said. Pork climbed to 83.74 cents a pound on June 18 after touching a nine-week low on June 16, according to the U.S. Department of Agriculture.
Cattle futures for August delivery rose 1.125 cents, or 1.3 percent, to 89.325 cents a pound. Earlier, the price reached 89.725 cents, the highest level since June 4. The commodity has gained 3.7 percent this year.
Feeder-cattle futures for August settlement increased 1.525 cents, or 1.4 percent, to $1.117 a pound.
Wholesale choice beef climbed 0.4 percent at midday to $1.5453 a pound, the highest level since June 10, according to the USDA.
Cattle futures fell in the previous two sessions before a report showed U.S. feedlots bought 23 percent more cattle in May than a year earlier. Declines may have been exaggerated because the USDA data was in line with analysts’ estimates, Smith said.
“There was nothing negative in the report,” Smith said. “The market was fearing the worst, and I think it discounted cattle too cheap.”
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