Aug. 18 (Bloomberg) -- Hog futures rose the most in 20 weeks as U.S. pork prices reached a two-year high amid tight supplies.
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 earlier, the USDA said today. Futures have climbed 19 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 2.55 cent, or 3.4 percent, to close at 78.075 cents a pound at 1 p.m. on the Chicago Mercantile Exchange. The gain was the biggest for the most-active contract since March 29. Earlier, hogs reached 78.35 cents, the highest level since Aug. 5.
Pork-belly futures for February settlement added 1.5 cents, or 1.4 percent, to $1.05 a pound.
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.
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