By Kelsey Gee
CHICAGO--U.S. hog futures jumped to a record Monday, signaling
that grocery shoppers could face further increases in pork prices
in the months ahead.
Hog futures for July, the front-month contract, gained 0.47
cent, or 0.4%, to $1.283 a pound at the Chicago Mercantile
Exchange, surpassing the previous record settlement reached on
Thursday.
Hog futures have soared 50% this year--among the fastest-rising
commodities--as a deadly swine disease has cut into supplies of
slaughter-ready animals. The gains have extended to bacon, ham and
pork-chop prices at the supermarket, with average U.S. retail pork
prices reaching a record $4.10 pound last month, up 15% from a year
earlier, according to the U.S. Agriculture Department.
The disease, known as porcine epidemic diarrhea virus, or PED
virus, has killed millions of piglets since it was identified in
the U.S. in April 2013. The virus, fatal only to young pigs, spread
rapidly through the fall and winter. Hogs typically take around six
months to grow to slaughter weight.
For the week ended Friday, U.S. wholesale pork prices jumped 5%,
stoking more aggressive bids for hogs in the physical markets as
retailers and restaurants stocked up on pork bellies, loins and
other products ahead of the Fourth of July holiday, an important
sales period for red meat.
"We've seen some impressive gains in both pork-product prices
and in the cash markets," said Adam Stout, an analyst with
brokerage INTL FCStone in Kansas City, Mo.
While the front-month hogs contract settled at a record Monday,
the most-active August contract slipped 0.175 cent, or 0.1%, to
$1.28975 a pound at the CME.
Analysts and traders are still waiting to see if the PED virus
leads to a sharp decline in U.S. pork supplies this summer. Hog
farmers have been selling bigger animals, which has mitigated the
impact of tighter supplies.
"The question I have is, when do we actually see the supply
reductions so many had feared?" Mr. Stout said. "Even though we've
seen lower numbers of hogs slaughtered, producers have done a
tremendous job offsetting the tighter supplies with heavier
weights."
Last week, the USDA reported that the average weight of hogs in
Iowa and southern Minnesota was 287 pounds for the week ended June
14, up 4.4% from a year earlier. Iowa is the nation's largest hog
producer.
Market participants are bracing for a quarterly USDA hogs and
pig report Friday to shed further light on the supply outlook for
the remainder of the year.
Cattle futures extended a recent climb, supported, too, by
smaller-than-expected supplies. June live-cattle futures advanced
0.6 cent, or 0.4%, to $1.4815 a pound. August feeder cattle gained
1.02 cent, or 0.5%, to $2.0790 a pound.
Write to Kelsey Gee at kelsey.gee@wsj.com
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