Livestock and meat futures rose sharply Wednesday, and analysts predicted more higher prices over the next few days because of an Agriculture Department report that the nation's hog herd was smaller than expected.
On other markets, grain and soybean futures surged higher; precious metals were up; energy futures were mixed, and stock index futures retreated.
The USDA estimated the nation's hog herd at 53.8 million heads as of Dec. 1, a 6% increase from a year earlier but far smaller than the 10% increase the trade had expected.
"What a shock," said Tom O'Hare, an analyst in New York with Smith Barney, Harris Upham & Co. "It's a big, big reduction from expectations. It's going to make everything much more valuable."
Analyst Chuck Levitt of Shearson Lehman Bros. predicted two or three days of 2-cent-a-pound price increases for future delivery of both live hogs and frozen pork bellies on the Chicago Mercantile Exchange. Two cents is the most those contracts are allowed to fluctuate during a session.
"We're talking a difference here of millions of hogs," Levitt said of the report. "A 53.8-million hog population is about 2.5 million less than the trade had expected."
Cold Weather Feared
The report also suggested that hog slaughter numbers are set to decline, which would pave the way for higher cash prices in the near future, said Tom Morgan, president of Sterling Research Corp. of Arlington Heights, Ill.
Livestock and meat futures advanced during the day's trading on fears that the continuing cold weather would result in lower weights, analysts said. The report was released after the market closed.
Live cattle settled 0.15 cent to 0.80 cent higher, with the contract for delivery in February at 64.72 cents a pound; feeder cattle were 0.70 cent to 0.80 cent higher, with January at 78.35 cents a pound; live hogs were 0.17 cent to 1.02 cents higher, with February at 43.47 cents a pound, and frozen pork bellies were 0.28 cent to 0.58 cent higher, with February at 52.15 cents a pound.
Wheat and soybean futures posted strong gains on the Chicago Board of Trade, with all wheat contracts settling up more than 10 cents a bushel and the November soybean contract gaining 16.5 cents on the day.
Ongoing trade talks between U.S. and Soviet officials in London prompted speculation that the Russians were in the market for large quantities of U.S. wheat and corn, said Joel Karlin, an analyst in Chicago with Research Department Inc.
Meanwhile, the cold snap in the Midwest and northeastern United States caused some waterways to freeze over, bringing barge traffic to a halt and slowing the movement of grains to market, Karlin said.
Wheat settled 10.5 cents to 12.5 cents higher, with the contract for delivery in March at $3.315 a bushel; corn was 2.5 cents to 4.25 cents higher, with March at $1.91 a bushel; oats were 2 cents to 4 cents higher, with March at $1.9225 a bushel; soybeans were 11.75 cents to 16.5 cents higher, with January at $6.26 a bushel.
sh Silver Demand Higher
Silver futures on New York's Commodity Exchange soared above $7 an ounce in a rally led by portfolio managers and foreign buyers, said Don Tierney, an analyst in New York with Stanley Bell & Co.
He said investment demand for silver has been growing steadily, with sales of silver Eagle coins last year four times higher than had been expected.
Gold settled $2.10 to $2.50 higher, with March at $2.10 an ounce; silver was 22 cents to 23.9 cents higher, with March at $7.145 an ounce.
Crude oil futures retreated slightly.
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