CHICAGO (Dow Jones)--Short covering and news that China has again allowed U.S. pork back onto its shores helped to push Chicago Mercantile Exchange hogs higher Wednesday.

Smithfield Foods Inc. (SFD) said Wednesday that China this week resumed imports of U.S. pork that was banned in April 2009 in response to the H1N1 influenza outbreak, which was then commonly referred to as swine flu.

"China wasn't the only thing that helped us, but it was a big factor," a CME hog trader said.

Another reason behind hogs' strong performance was speculative buyers who targeted June and July bullish price discounts to CME's lean hog index. And, prior to futures' 10:05 EDT outcry open, June emitted a 30% Relative Strength Index signal. An RSI indicator of 30% or less implies that the month is oversold and due for an upward adjustment soon.

Pork futures moved higher in the face of bearish fundamentals and negative market outside influences including Tuesday's drop in wholesale pork prices, steady-to-lower cash hog prices Wednesday and the stock market's fall of nearly 2%.

Equities' near-term fate appears to be tethered to economic instability in Europe that could ultimately result in diminished overseas demand for expensive U.S. products, including high-end pork items.

Wholesale pork prices Tuesday were down for a second straight day as retailers buy fresh pork on an as-needed basis while stocking meat cases for the upcoming U.S. Memorial Day holiday.

In addition, packers are reluctant to raise bids for cash hogs, given estimated margins that slipped to $7.98 Tuesday from $9.72 Monday, partly because of diminished retail interest in fresh pork.

Spot-June finished 0.72 cent higher, or 0.9%, at 82.02 cents a pound. Nearby-July closed 1.10 cents higher, or 1.3%, at 82.97 cents.

CME pork bellies closed sharply higher in low volume, and May ended limit up, on short covering and lean hog advances.

May ended 3 cents higher, or 2.9%, at 105.25 cents. July closed 1.20 cents higher, or 1.2%, at 100.95 cents.


Cattle Complex

Floor-traded CME live cattle settled flat to weak amid negative market fundamentals and uneasiness about equities that struggled to find equilibrium.

Spot-June and nearby-August live cattle slumped to seven-week lows at the start because traders were unsure what to make of this week's disappointing cash cattle price results versus futures' bullish price discounts to cash.

Cash-basis cattle this week fetched $96 to $98, compared with mostly $100 last week.

Cattle traders were also focused on the Dow Jones Industrial Average as it flirted with the prospect of a sharp break tied to ongoing overseas financial anxiety. Economic turmoil in Europe may eventually harm high-end beef exports to that part of the world.

June and August later stepped down after both months tripped sell orders that loitered below the market. Front-end cattle were also pressured by lower midday wholesale beef prices.

Nonetheless, cattle ended higher from morning lows after participants who searched for a market bottom stepped in when June and August approached 100-day moving-average support levels.

Spot-June live cattle closed down 0.32 cent, or 0.4%, at 92.42 cents a pound. Nearby-August finished unchanged at 91.52 cents. October ended down 0.15 cent, or 0.2%, at 92.70 cents.

Feeder cattle at the exchange settled mixed on spreading into May out of August. Live cattle's slight pullback also limited back-month feeder cattle buying interest.

Spot-May closed up 0.60 cent, or 0.5%, at 110.35 cents. Most-actively traded August finished unchanged at 112.57. September closed down 0.15 cent, or 0.1%, at 112.25 cents.


-By Theopolis Waters, Dow Jones Newswires; 312-347-4965; theopolis.waters@dowjones.com