Chicago - Lean hog and pork belly futures continued to rally early in the week at the Chicago Mercantile Exchange as analysts and traders speculated about a possible end to paltry pork prices.
On other markets, soybean and grain futures fell, while heating and crude oil futures rose.
Some analysts speculated that continued heavy snows in Chicago and some other parts of the upper Midwest on Monday sparked the notion that farmers would have a difficult time getting hogs to market.
“That probably helped as far as prices go,” said Dan Vaught, a livestock analyst with AG Edwards & Sons in St. Louis. “Whenever you have snow on the roads, it gets harder for producers.
“But my old boss used to say that when the price was right, the producers would find a way to get them to market.”
Prices for farmers had dropped as low as a paltry 7 cents a pound last month but topped 26 cents on Monday -- as lean hog futures for February delivery flirted with the 40-cent-a-pound mark. Some analysts speculate that farmers could get more than 30 cents a pound before the rally ends.
Vaught and other analysts say some believe farmers had been glutting the market in December, when prices hit an all-time low.
“The thinking may be that the reason the numbers were so high was that producers were rushing hogs to market regardless of the price and were just trying to get rid of them,” he said.
But Vaught's not as optimistic as some about the hog market's ability to rebound.
“I am definitely guarded,” he said. “I'm just rather skeptical of the idea that the industry has all of the sudden gotten back on its feet.”
In trading Monday, livestock futures were mixed on the Chicago Mercantile Exchange.
February live cattle dropped .20 cent to 62.32 a pound; March feeder cattle were down .78 cent at 72.95 cents a pound; February lean hogs rose 2 cents to 39.20 cents a pound; February pork bellies fell 3 cents to 47.92 cents a pound.
Meanwhile, soybean and grain futures prices fell Monday in trading on the Chicago Board of Trade.
Analysts say traders are still jittery about the lack of export demand and iffy weather in South America, which could particularly affect soybean and corn crops in Brazil and Argentina. Extended forecasts are calling for some rain, which could give crops a boost.
Traders also are awaiting Tuesday's release of the 1998 crop reports from the U.S. Department of Agriculture, as well as supply-and-demand data for the U.S. and other parts of the world.
“That gave us a lot of impetus to profit-take today,” said Don Roose, an analyst with Iowa-based U.S. Commodities Inc.
Wheat for March delivery fell 5 1/2 cents to $2.85 3/4 a bushel; March corn dropped 2 cents to $2.19 3/4 a bushel; March oats fell 1/4 cent to $1.11 1/4 a bushel; and March soybeans fell 8 1/4 cents to $5.46 1/4 a bushel.
On the New York Mercantile Exchange, crude oil and heating oil futures continued to rise. But, while some attributed the rise to continued cold in the Midwest, others say the cold is unlikely to hold out long enough to put a substantial dent in the heating oil supply -- a sentiment that they say will first affect the glutted natural gas market.
February crude rose 37 cents to $13.44 a barrel; February heating oil was up 1.32 cents to 37.43 cents a gallon; February unleaded gasoline rose .96 cent to 39.15 cents a gallon; and February natural gas fell .51 cent to $1.779 per 1,000 cubic feet.
Meat Industry Insights News Service
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