October 15, 2018 / 10:01 PM / 10 months ago

LIVESTOCK-Hog futures surge on optimism for higher cash prices

CHICAGO, Oct 15 (Reuters) - Chicago Mercantile Exchange lean hog futures soared as much as 3 percent on Monday in bull-spreading linked to hopes of stronger U.S. cash hog prices and fears of African swine fever spreading in top pork consumer China, traders said.

The gains came after China reported an African swine fever case on a farm with nearly 20,000 pigs, the largest farm yet to report the highly contagious disease.

“It seems like this African swine thing took a more serious twist this morning,” said Archer Financial analyst Dennis Smith. “That triggered a lot of buying.”

Traders have been closely tracking the swine fever outbreak for weeks, with some hopeful that a smaller herd in China may force buyers there to boost pork imports. The U.S. hog herd is the biggest ever and export demand is needed to prevent supplies from backing up in the domestic market.

Front-month December hogs jumped 1.750 cents to 56.750 cents per pound, rising for the second straight session. February hogs were up 1.675 cents to 63.900 cents.

Bullish traders were betting the December hog contract would rise to match the cash market. Hogs in the top cash market of Iowa and southern Minnesota were down 60 cents to $59.98 per cwt - equivalent to an over 3-cent premium to futures, according to the U.S. Department of Agriculture.

Cattle futures, both live and feeder, were mostly higher in technical buying and rising wholesale beef prices.

CME November feeder cattle futures earlier dropped to a one-month low of 153.750 cents per pound, pressured by rising corn prices that raised costs for fattening cattle and threatened demand. But the contract rebounded, finishing up 0.600 cent at 155.225.

More actively traded December live cattle were up 1.800 cents at 117.975 cents per pound, also recovering from earlier declines.

With sales in U.S. cash cattle markets unlikely until later this week, traders looked to daily beef prices for demand clues.

Choice-grade boxed beef was up $1.48 to $204.19 per cwt, USDA data showed. (Reporting by Michael Hirtzer Editing by James Dalgleish)

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