By Benjamin Parkin
Hog futures started the week higher on an unexpected bump in pork prices.
Wholesale pork prices rose to $1.0528 a pound at midday Monday, with pork bellies climbing to a new record of $2.1343 a pound. A number of analysts had expected prices to peak as wholesalers prepare for lower demand in the fall, but a run-up in the cost of bellies has continued to stave off a downturn.
That gave the futures market a boost, with August-dated lean hog contracts at the Chicago Mercantile Exchange rising 1.1% to 80.775 cents a pound. Futures continue at a discount to cash prices, which were expected to fall further on Monday, giving traders room to buy.
Increasing hog supplies will pressure the market, said Rich Nelson, chief strategist at brokerage Allendale Inc. In its most recent inventory report, the U.S. Department of Agriculture showed the national herd rising to a seasonal record of 71.7 million head in early June, with a 2% increase in the breeding herd.
Cattle futures were mixed, with the front-month contract lower while later months rose. CME August live cattle futures fell 0.7% to $1.1695 a pound.
That market was also supported by higher meat prices, with a pound of wholesale beef rising to $2.0992 a pound. Beef prices have recently fallen sharply after a July 4 grilling boost.
Traders are waiting to see what direction the cash market will take as the week progresses, after last week's unexpectedly higher cash prices helped futures rally.
Write to Benjamin Parkin at [email protected]