CHICAGO, July 12 (Reuters) - Chicago Mercantile Exchange (CME) lean hog futures closed higher on Friday and the most-active August contract recorded its biggest weekly gain since April, supported by expectations of thinning U.S. hog supplies, traders said.
A glut of hogs has hung over the futures market for months, but traders see supplies starting to decline just as hot temperatures expected in the U.S. Midwest next week threaten to reduce hog weights, curbing pork supplies.
“The feeling is, with this heat coming, that’s going to help take tonnage off the market,” said Don Roose, president of Iowa-based U.S. Commodities.
Traders also noted support from fears that outbreaks of African swine fever in China’s hog massive herd may spread, boosting demand for pork imports. China has reported more than 140 outbreaks of the disease since it was first detected in the country in early August 2018, and more than 1.1 million pigs have been culled.
CME August lean hog futures settled up 1.475 cents at 80.650 cents per pound but stayed inside of Thursday’s trading range. For the week, the contract climbed 4.7%, its biggest weekly climb since the first week in April.
October hogs rose 1.625 cents on Friday to finish at 73.225 cents.
CME live cattle futures ended higher as traders anticipated higher cash cattle prices. Like hogs, the upcoming U.S. warm spell is expected to reduce cattle weights given that livestock tend to eat less during hot weather.
CME August live cattle futures settled up 0.600 cent at 108.475 cents per pound after reaching 108.725, the contract’s highest since May 28. CME October cattle hit a two-month high at 110.225 before closing at 109.975 cents, up 0.650 cent for the day.
The U.S. Department of Agriculture reported some early live cattle trade in the Iowa-Minnesota market on Thursday at $114 to $115 per cwt, up from $112 to $114 last week.
“The leverage appears to be away from the packer and toward the feedlot right now,” said Dennis Smith, a commodity broker with Archer Financial Services in Chicago.
CME feeder cattle futures closed lower, pressured by a jump in Chicago Board of Trade corn futures on forecasts for potentially stressful crop weather. Corn is the primary feedstock for cattle, and higher corn prices tend to raise feed costs.
CME August feeder cattle futures settled down 1.025 cents at 141.600 cents per pound. (Reporting by Julie Ingwersen; Editing by Tom Brown)