Chicago Mercantile Exchange lean hog futures advanced on Tuesday on technical buying and bargain buying following an early-week uptick in wholesale pork prices and packer margins, traders said.
Mild U.S. weather stirred hopes of an accelerated pace of pork buying for outdoor grilling, although longer term concerns about a looming supply buildup of hogs this spring and summer offset some of that support.
Domestic and export demand for pork could also be lifted by consumer worries about a recent outbreak of bird flu on a Tennessee poultry farm, according to analysts. Several countries have already curbed U.S. poultry imports in response.
April hogs ended 0.875 cent per pound higher at 68.050 cents, closing above its 10-day moving average of 67.675 cents. May futures added 0.550 to 73.600 cents and June gained 0.675 to 77.425 cents.
"The pork cutout has been moving higher lately. Seasonal demand with some of the warmer weather we've had might also give us a little bit of a demand bump," said Dax Wedemeyer, a broker and analyst with U.S. Commodities.
The U.S. Department of Agriculture reported a $1.90 per cwt surge in the average wholesale port price on Monday and another solid gain Tuesday morning. But after futures had closed, the agency reported an 82-cent drop in the cutout price for the day to $81.71 per cwt, led by a $7.72 plunge in the pork belly price.
The average pork packer margin remained comfortably in the black ink at $23.75 per head, up from $18.65 a week ago, as calculated by HedgersEdge.com.
Live cattle futures declined on technical selling and concerns that cash markets may struggle to capture steady prices this week, offsetting underlying support from firm beef prices and strong packer margins.
April live cattle closed down 0.200 cent per pound to 115.350 cents, failing to breach chart resistance at the contract's 50-day moving average of $115.889. June ended down 0.650 cent at 105.625 cents.
The wholesale choice boxed beef cutout value jumped $2.40 per cwt on Tuesday afternoon to $212.00 while select cuts gained $1.09 to $205.05 per cwt, according to the USDA.
Tuesday's average beef packer margins were a positive $33.10 per head, up from a negative $19.00 a week ago, as calculated by HedgersEdge.com.
CME feeder cattle eased on technical selling and spillover pressure from declining live cattle futures.
March feeders closed 0.125 cent per pound lower at 123.950 cents.