By Benjamin Parkin

CHICAGO--Hog futures surged Thursday to reverse almost a week's worth of losses, as traders switched their bets from cattle to hogs.

April lean hog futures rose 1.8% to close at 69.350 cents a pound at the Chicago Mercantile Exchange, while contracts for June delivery jumped 2.4% to 77.600 cents a pound.

Cattle futures, meanwhile, slid after reaching year highs this week. Traders, sensing that the cattle rally could be ending, booked profits on those contracts to buy up hogs, which were cheap in comparison. The price of hog futures was too low after a sustained bout of selling, they said.

Live cattle futures for April slid 0.6% to $1.21775, backing away from 14-month highs.

"The cattle market was way stretched out, it was overbought on a huge run," said Don Roose, president of U.S. Commodities Inc. "That gave us the impetus for the big swing around."

The spread between cattle and hog prices is itself a result of the rising cost of beef and sliding pork. But wholesale beef prices fell Thursday morning, dropping $1 to $222 per 100 pounds, in a sign that the rally could be ending.

Analysts said that cheap pork could soon replace beef as a more financially viable meat at the retail counter, especially if demand is strong.

While a scandal involving the alleged export of tainted Brazilian beef sparked excited talk about potential for U.S. ranchers to increase their beef exports, some analysts said it presents greater opportunities for U.S. hog farmers, whose relatively cheap product would face fewer bureaucratic hurdles in shipping to large markets like China.

"We're ready to move on that," said Craig VanDyke, an analyst at Top Third Ag Marketing in Chicago.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

March 23, 2017 15:19 ET (19:19 GMT)

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