Chicago Mercantile Exchange live cattle and lean hog futures rose to life-of-contract highs on Tuesday, lifted by investment fund buying linked to optimism that meat prices will continue to rise, traders said.
Speculative investors who already were holding massive net long positions in cattle and hog futures added to those bets, with hogs jumping 4 percent and cattle rising to the highest levels since June.
"Funds looked at this thing and decided this was an opportunity to jump into the pool," CHS Hedging analyst Steve Wagner said.
Most-active CME December live cattle was sharply higher for the second straight session, settling up 2.225 cents to 125.625 cents per pound, off the contract's earlier lifetime peak of 125.900 cents. The October cattle contract expired at midday up 0.925 cent at 120.500 cents.
The U.S. Department of Agriculture's choice boxed beef cutout, which tracks beef deals in the wholesale market, was up $3.12 to $206.44 per cwt.
Beef packers on Friday paid sharply higher prices to buy cattle from feedlots in the U.S. Plains to take advantage of the higher meat prices that boosted their profit margins - and those gains in the cash market last week carried over into the futures market this week.
Weekly data on Friday from the Commodity Futures Trading Commission showed large speculators, a category that includes hedge funds, expanding their net longs in livestock contracts.
CME January feeder cattle futures on Monday finished up 2.225 cents at 159.575 cents per pound after reaching a contract high of 160.300 cents.
Feeders also were supported by weakening corn futures , which reduced feed costs and can increase demand for cattle from feedlots that fatten the animals to slaughter weight.
CME December hog futures finished up 2.825 cents to 68.000 cents per pound, and hog futures on a continuous chart notched their biggest percentage gains since Oct. 3.
Supplies of U.S. cattle, hogs and poultry were abundant and the recent run-up in cattle and hog futures was largely tied to demand, Wagner said.
"Cash hogs have had an impressive run," he added. "All things being equal, futures feel like they have to catch up."
USDA data released after the close showed cash hogs in the top market of Iowa and southern Minnesota were down 44 cents to $64.21 per cwt while wholesale pork eased 3 cents to $78.54 per cwt.