Chicago | Reuters — U.S. lean hog futures surged on Thursday on rising cash hog prices and growing concerns about the spread of African swine fever in China, the world’s top hog and pork producer, traders said.
Chicago Mercantile Exchange October futures closed up the daily three-cent-per-pound trading limit, aided by technical buying in the most active contract.
“There are some indications that the cash market may be bottoming earlier than usual this year,” said Doug Houghton, analyst with Brock Associates Inc.
“The swine fever was supportive as well, but the nearby futures were leading the rally today,” Houghton said. Past rallies stemming from fears of a broader African swine fever outbreak had been bullish to deferred-month contracts, he said.
China reported four cases of African swine fever on Thursday, bringing the number of outbreaks to 13. Fears that a widespread cull would be needed to control the disease have buoyed hog and pork prices.
CME October lean hogs ended up three cents at 54.975 cents, breaking through chart resistance at its 50-day moving average and closing higher for a fourth straight session (all figures US$). December hogs were up 1.5 cents at 56.675 cents.
The daily limit is due to expand to 4.5 cents on Friday following the limit-up close.
The CME lean hog index notched an 18-1/2-year low this week before turning higher for the first time since late June in what may be the start of a seasonal upturn that typically only begins in October or November, traders said.
Meanwhile, the average cash hog price in the closely followed Iowa and southern Minnesota market rose $1.64/cwt on Thursday in a fourth straight day of gains, according to the U.S. Department of Agriculture.
Live cattle futures ended narrowly mixed as the market awaited fresh trading at cash feedlot cattle markets. Futures have been underpinned by strong packer margins but ample cattle supplies have capped rallies.
Cash sales were light last week due to a shorter Labour Day holiday production schedule. Packers will be buying for a larger slaughter this week, but more cattle are also available as last week’s unsold livestock has bolstered showlists, traders said.
Cattle bids at U.S. Plains feedlot markets were around $103-$106/cwt while offers stood at $110 or more, they said.
CME October live cattle fell 0.15 cent to 108.9 cents/lb. October feeder cattle futures ended up 0.05 cent at 151.525 cents.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago.Tagged cash prices, cattle futures, China, closing markets, CME, feeder cattle, hog futures, lean hog, live cattle, swine fever