CME cattle and hog markets rally fuel trading

 

 

CME Group agricultural trading jumped more than 11% in April, fuelled in part by bull markets in beef and pork that have had speculators pouring into cattle and hog futures.

 

Agriculture futures and options trading averaged 890,202 contracts a day during April, up from 799,147 during the same month in 2009, CME, the Chicago-based exchange operator, said in a statement today.

 

Among specific CME markets, trading rose 31% in cattle, 6.4% in hogs and 13% in milk, compared with April 2009.

 

Livestock futures trading surged this year as cattle and hog prices rallied, reflecting widespread herd reductions that cut availability of slaughter-ready animals and forced meatpackers to bid more aggressively. The rallies have attracted buying from managed futures funds and other speculators who in recent years have targeted corn, crude oil and other commodities.

 

CME lean hog futures prices have doubled since August as animal inventories shrunk. In trading earlier, June lean hogs fell 0.175 cent to 86.75 cents a pound. The CME contract is based on carcass prices.

 

June live cattle today rose 0.5 cent to 96.025 cents a pound, after reaching a contract high at 96.6 cents. The contract is up 9.5% this year.

 

Rising prices also reflect improving prospects for beef and pork demand as the economy recovers from recession, Nelson said. Signs of improving restaurant business that comprises a major portion of demand for beef, pork and cheese has contributed to bullish sentiment.

 

Trading growth in the CME's live cattle and feeder cattle contracts so far this year outpaced all but a few of the exchange's 30-plus agricultural products, which include soybeans, sugar and wheat.

 

An average of 45,892 live cattle futures and options contracts traded each day last month, up from 35,050 in April 2009, according to CME data. Live cattle trading during the first four months of 2010 averaged 52,134 contracts a day, up 29%.

 

Lean hog futures and options trading averaged 28,267 contracts a day during April, up from 26,567 the same month a year earlier.

 

Meanwhile, the rise in milk trading probably reflects recent price increases in by-products, including butter and whey, analysts said.

 

For all CME products, including contracts based on 30-year Treasury bonds and the Standard & Poor's 500 index, trading for the first four months this year rose almost 14%, to an average of 11.7 million contracts a day.

 

Agricultural contracts account for about 7% of total CME trading.