U.S. hog futures hit a two-and-a half-month high on Friday, and extended their weekly win streak to five, fueled by higher cash hog and wholesale pork prices, said analysts and traders.
Chicago Mercantile Exchange (CME) hogs ended up almost 1.8 per cent for the week as grocers feature pork for National Pork Month in October. That compelled packers who are operating with profitable margins to raise bids for supplies.
"It's a balancing act in the industry trying to figure out how much the market will continue to rise because it tends to perform rather poorly during the November and December period," said Vaught Futures Insights president Dan Vaught.
Hams would likely garner considerable buying interest during the winter holidays while other pork cuts suffer, he said.
Spot October hogs, which expired today at noon CDT, settled up 0.425 cents per pound to 82.75 cents (all figures US$).
December, the new lead contract, closed 0.875 cents higher at 78.375 cents. It also led advances because of its discount to the exchange's lean hog index at 82.28 cents.
Both contracts peaked at 2 1/2-month highs for a second day in a row.
The average price for hogs in the most-watched Iowa-Minnesota market Friday morning was $83.42 per hundredweight (cwt). That was $2.56 higher than on Thursday and up nearly $7 from a week earlier, according to U.S. Department of Agriculture data.
HedgersEdge.com estimated the average packer margin for Friday at positive $9.55 per head, compared with positive $8 on Thursday and positive $8.70 for Oct. 5.
Live cattle slump
Live cattle futures dropped on profit taking after recent gains, but still finished up slightly for a second consecutive week.
Friday's losses surprised investors who saw cash prices rise $1/cwt from last week's $124 sales, retailers buy beef at current prices and fewer cattle up for sale this week.
The price for choice beef at wholesale Friday morning rose 14 cents/cwt from Thursday to $191.45 and was $1.21 higher than a week earlier, said USDA.
"We're setting up for a relatively weak fresh red meat demand period a week or two ahead of Thanksgiving with fairly big supplies," said Linn Group analyst John Ginzel.
Traders were also indifferent to 10 deliveries reported by the exchange late on Thursday that were taken by a firm that willingly accepted them.
And although the government's beef export data on Friday morning was mildly disappointing, the comparisons were made to larger numbers in recent weeks, a trader said.
USDA data showed beef exports last week at a net 15,100 tonnes, mostly for Canada. That was down five per cent from the previous week but up 13 per cent from the prior four-week average.
Spot October closed 0.7 cent/lb. lower at 124.6 cents and December finished off 0.425 cent at 125.5 cents.
CME feeder cattle spiked to highs of the day before settling with modest gains as corn prices reversed Thursday's steep run up, easing feed input costs.
Feeder cattle finished down more than one per cent for the week and suffered their biggest weekly percentage loss since late July 2012.
Spot October feeder cattle up 0.35 cent/lb. to 143.1 cents. Most-actively traded November closed at 144.225 cents, 0.425 cent higher.
-- Theopolis Waters writes for Reuters from Chicago.