* China’s government speaks out on pork supplies
* Traders think China is buying more U.S. pork
* Record high U.S. wholesale pork, higher cash hogs
* Expected firm cash fed cattle late week
* Hopes for some rain in dry grasslands buoy feeders
By Sam Nelson
CHICAGO, July 28 (Reuters) - U.S. hog futures advanced on Thursday on renewed talk China may be seeking more U.S. pork, record high wholesale pork prices and higher live cash hog markets in the U.S. Midwest.
“China’s government said they want their pork suppliers to keep a 10 day supply on hand and right now they only have a 2 day supply, so everything points to increased pork demand by China,” said Dennis Smith, broker for Archer Financial.
China’s State Council in Beijing said on Thursday that China will do more to boost pork supplies and stabilize prices as part of its efforts to check inflation. [ID:nL3E7IS0UK]
Pork prices fell last week in China, for the first time since April, data from the Commerce Ministry showed earlier this week.
Hog futures for August 2LHQ1 settled up 0.550 cent per lb at 102.475 cents per lb. October hogs 2LHV1 were up 1.025 cents per lb at 92.450.
In early July, the hog futures market soared their daily 3-cent per lb limit on talk China bought a large amount of U.S. pork. China has been a regular buyer of U.S. pork and the U.S. Department of Agriculture (USDA) has reported 2011 purchases through April at nearly 107 million lbs, up from 3.6 million a year earlier.
“Pork demand is up, hog market weights are light and wholesale pork is bringing higher prices,” said Jack Salzsieder, broker for K&S Financials.
USDA on Wednesday reported record high wholesale pork carcass prices and cash hog markets were $1 per hundredweight higher in the Midwest as pork plants sould product for the rest of this week into next week.
Cattle and feeder cattle futures also advanced but bullish momentum was lacking in the livestock futures sector as America’s politicians continue wrangling in Washington in an attempt to resolve the nation’s debt crisis.
“Trading is still being influenced by the debt talks,” Smith said.
Chief executives from the nation’s largest financial firms said the consequences of inaction “would be very grave.” [ID:nN1E76R0J0]
August fed cattle 2LHQ1 were up 0.550 cent per lb at 111.625 and October 2LHV1 was up 0.700 at 116.150.
“I’m thinking the cash cattle market could turn firm or at least steady late this week. I think the $1 lower trend in Kansas early in the week was movement of cattle because of the heat,” Smith said.
Feeder cattle for August 2FCQ1 were up 0.425 at 135.800 and September 2FCU1 was up 0.675 at 137.600.
“If Tropical Storm Don brings in a lot of rain to Texas and pastures green up I think feeder cattle prices and demand could really turn strong,” Smith said.
A devasting drought in the U.S. Southwest and Mexico had led to an exodus of young feeder cattle off of burned up grasslands into feedlots, putting pressure on feeder cattle prices.
The prospects for some rain in Texas grazing land led to speculation that feeder cattle movement to market would slow down, a supportive market factor. (Reporting by Sam Nelson; Editing by John Picinich)