U.S. hog futures surged as much as 4 percent on Monday, lifted by investment fund buying and higher pork prices that boosted meatpackers' profit margins, traders and analysts said.
Hogs on a continuous chart rose to the highest levels since last June 23. Most-active Chicago Mercantile Exchange August lean hog futures rose sharply for the second straight session, rebounding from Thursday's one-month low.
"You're seeing some funds come in," said Rosenthal Collins hog broker James Burns, adding that he was long the market.
"The overall supply at this time period is not as great as people anticipated. (Animal) weights are down some and demand is up. It's that easily explainable," Burns said.
Lower hog weights result in relatively tighter supplies and suggest that pig farmers were selling rather than holding back animals to fatten them further.
CME August hogs settled up 2.350 cents at 81.475 cents per pound. Front-month July hog futures notched a contract high of 84.375 cents before finishing at 83.900, up 1.575 cents.
Hog prices have climbed in U.S. Midwest cash markets. Wholesale pork prices were the highest in more than a year on strong retailer demand for meat ahead of the U.S. Independence Day holiday on July 4, when many consumers eat hot dogs and burgers cooked on outdoor grills.
Cattle futures, meanwhile, extended losses on chart-based selling and investment fund liquidation. Cattle prices typically decline at this time of year, and lower-priced cattle trades last week in the U.S. Plains triggered selling in futures.
CME August live cattle futures finished down 2.075 cents at 116.100 cents per pound, lowest since April 27.
CME August feeder cattle eased 2.875 cents to 145.000 cents per pound, lowest since May 11.
The U.S. Department of Agriculture said feeder cattle prices were down $1 to $4 per cwt at a closely watched cash auction in Oklahoma City.