Hog futures surged the most in almost five months Monday on signs of improved demand for U.S. pork as supplies of animals tighten. Cattle also advanced.
Wholesale-pork prices jumped 4.5 percent last week to the highest since July 9, capping the biggest weekly rally since June 14, U.S. Department of Agriculture data show. Meat processors slaughtered 0.9 percent fewer hogs than the same week a year earlier, and U.S. exporters sold 11,000 metric tons of pork in the week through July 25, up from 8,000 a week earlier, according to the USDA.
"Production will be low this week" and pork prices "will keep going higher," Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago, said in a telephone interview. "Demand for pork is pretty good at this point, and under these production levels, demand will outstrip supply."
Hog futures for October settlement advanced 1.8 percent to close at 85.5 cents a pound at 2 p.m. on the Chicago Mercantile Exchange, the biggest gain since March 7.
Cattle futures for October delivery rose 0.1 percent to settle at $1.2455 a pound on the CME. On Aug. 2, prices touched $1.241, the lowest for a most-active contract since July 9.
Feeder-cattle futures for September settlement were unchanged at $1.57 a pound, after fluctuating between gains and losses.