Chicago | Reuters –– U.S. lean hog futures rose as much as two per cent on Thursday, lifted by large weekly pork export sales and hopes a deal between JBS USA and Cargill could lead to more international shipments, traders and analysts said.
Volume was light in an abbreviated session ahead of the U.S. July 4 holiday, with both live cattle and feeder cattle futures ending roughly unchanged.
The U.S. Department of Agriculture earlier said 38,979 tonnes of U.S. pork were sold for export in the week ended June 25, the largest volumes of the year.
The export news followed an announcement late on Wednesday that JBS USA, a subsidiary of the world’s largest meat packer JBS SA, agreed to buy Cargill’s U.S. pork assets for $1.45 billion (all figures US$).
The deal stoked optimism of higher volumes of pork exports, as JBS leverages its global reach, even as a strong U.S. dollar limits the competitiveness of U.S. meat abroad.
“(The deal) is good to see — it could lead to more exports,” said Jeff French, a broker at Top Third Ag Marketing in Chicago.
CME lean hogs on a continuous chart rose to the highest levels since June 12. Most-active August futures were up 1.525 cents, to 76.375 cents/lb., while front-month July gained 1.675 cents, to 78.775.
“The (lean hog futures) trade feels that as long as a corporate (hog) producer feels there’s reason to increase their position, that hogs and pork in general have a good long-term future,” Allendale Inc. analyst Rich Nelson said of the JBS-Cargill deal.
CME live and feeder cattle futures each were little-changed after huge gains in the previous session that were tied to unexpectedly higher prices in the cash markets for slaughter-weight steers.
August live cattle edged 0.15 cent higher to 151.225 cents/lb., about a one-week high, while October live cattle were up 0.425 cent, to 154.125.
Feeder cattle were slightly lower, pressed down by a rally in corn futures that resulted in the highest prices for the feed grain in about seven months.
August feeders shed 1.05 cent, to 217.45 cents/lb., and September feeders 0.95 cent, to 216.1.
“(Feeders) are trying to find their price as corn futures rally. If there is higher-priced feed, that gives (cattle) feeders less money to pay up for calves,” French said.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.Tagged cargill, cattle futures, CME, hog futures, JBS