U.S. Hog Futures Pressured by Profit-Taking; Cattle Advance

--Hog futures mixed, face some pressure after early week gains

--Cattle futures advance ahead of trade in the cash markets

--Technical buying after cattle futures hit multiweek low also seen as supportive

By Kelsey Gee

CHICAGO--U.S. hog futures are mixed early in the session Wednesday amid profit-taking, easing from gains this week as traders search for signs of demand for cheaper pork products.

October lean hogs are up 0.12 cent to $1.0700 a pound at the Chicago Mercantile Exchange. December hog futures recently slid 0.35 cent, or 0.4%, to 95.57 cents a pound.

Wholesale pork products have fallen sharply in price since mid-July, enticing fresh buying from bargain-hunting grocery stores, restaurants, and export buyers. This retail demand has encouraged processors to bid more aggressively in the cash markets for available hogs.

The cash market uptick has, in turn, underpinned fresh gains in the futures market, and analysts said Wednesday that profit-taking was weighing on the nearby contracts as investors search for signs of new demand.

Cattle futures, meanwhile, are rising ahead of trade in the cash markets, fueled by technical buying after prices sank to a multiweek low on Tuesday.

"The trend in cattle seems to be that if you give the market any reason to rally people will hop on board," said Joe Hofmeyer, an analyst with commodity brokerage CHS Hedging Inc. in Minnesota. Investors "want to stay long this market because they know supplies will be tight through 2015 and that the cattle herd will not be rebuilding instantly," said Mr. Hofmeyer.

Abundant grass and pasture for grazing and the cheapest feed costs in four years have given producers more incentive to hold back more female breeding animals on the farm, rather than selling them to be fattened for slaughter. This could have the long-term effect of expanding the size of the nation's cattle herd from its smallest since the 1950s, though temporarily restrains supplies of market-ready animals available to processors for beef.

October live-cattle are up 1.025 cent to $1.57225 a pound. Most-active feeder-cattle futures for October recently gained 2.42 cents to $2.2830 a pound.

Write to Kelsey Gee at [e-mail]

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