High (Prices) on the Hog

Hog futures jumped to a two-month high Tuesday as traders continued build a seasonal premium into the market.

Futures traders are betting that rising pork prices, higher cash sales and large slaughter numbers are signs of strong demand ahead of holidays featuring meat such as Memorial Day.

“Seasonal demand continues to pull us up,” said Craig VanDyke, an analyst with advisory firm Top Third Ag Marketing. “Packers kill as much as they can because the demand is absorbing it.”

Pork packers have consistently slaughtered over 2.2 million hogs a week over the past month, while pork prices have risen by around 15% in the past three weeks. Futures have rallied since hitting a multimonth low in mid-April, but selling in the cattle market has recently weighed on hog contracts.

Lean hog futures for June delivery rose 1.9% to 78.725 cents a pound on Tuesday at the Chicago Mercantile Exchange, the highest close since March 16.

Analysts say sky-high wholesale beef prices may further help demand by pushing consumers toward pork as the price difference trickles down to the retail level.

Cattle futures slid for the sixth consecutive session Tuesday, despite the continued rise of beef.

Analysts said live cattle futures were due for a correction after open interest rose to record levels in recent weeks.

CME June live cattle futures fell 0.5% to $1.219 a pound.

Soybean futures rose to multiweek highs Tuesday as traders bet U.S. farmers would cap oilseed acreage this year.

U.S. farmers are already expected to plant record amounts of soybeans, but recent delays to corn planting concerned some traders they might switch even more of their land to the oilseed. A recent bout of good weather, which allowed farmers to roar ahead with corn seeding, allayed some of those concerns.

Soybean futures for July delivery rose 1.1% to $9.76 1/4 a bushel at the Chicago Board of Trade, the highest close since late March.

Grain futures were under pressure on continued pessimism in the commodity sector, with crude-oil prices lower Tuesday. Corn futures in particular have wobbled in recent days as efficient fieldwork pushes traders to pull out of bets that weather delays would reduce this year’s crop yield.

“Sellers have the confidence to keep the pressure on the market,” said Doug Bergman, director of the agricultural trading desk at RCM Alternatives.

CBOT July corn futures closed unchanged at $3.67 3/4 a bushel while wheat rose 0.2% to $4.24 1/4.

Oil prices flipped to small losses Tuesday with concerns about strong imports to the U.S. erasing earlier gains tied to optimism about extended production cuts from the world’s biggest exporters.

Light, sweet crude for June delivery settled down 19 cents, or 0.4%, at $48.66 a barrel on the New York Mercantile Exchange, snapping a four-session winning streak. Prices had climbed as high as $49.38 a barrel earlier in the morning before retreating.

Gasoline futures rose 0.89 cent, or 0.6%, to $1.6043. Diesel futures added 0.68 cent, or 0.5%, to $1.5164 a gallon. Both settled at fresh three-week highs.

Natural gas prices posted their biggest daily losses since February as cool weather forecasts have traders repositioning.

Natural gas for June delivery settled down 11.9 cents, or 3.6%, at $3.23 a million British thermal units on the New York Mercantile Exchange. That is the market’s biggest loss since Feb. 21. It is the second losing session in a row, pushing prices back toward the middle of a 30-cent range they had settled in every session for almost seven weeks up until Thursday, when a brief, sharp rally was driving up the market.

The S&P 500 and the Dow ended Tuesday’s session flat after mixed economic data and retail earnings, while the Nasdaq had another record close with help from technology stocks. The Dow Jones Industrial Average  closed down 2.19 points, or 0.01 percent, to 20,979.75, and the S&P 500 lost 1.65 points, or 0.07 percent, to 2,400.67, easing from an intraday record high of 2,405.77.

The Nasdaq Composite added 20.20 points, or 0.33 percent, to 6,169.87, a record close for the index.

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