May 12, 2010

US hog futures fall on slowing demand

US hog futures fall for the first time in three sessions as the high cost of pork lead to speculations of slowing retail demand.

US slaughterhouses processed 768,000 hogs on May 10 -11, 2.9% lower than a week earlier. The price of wholesale pork is down 0.9% since reaching a 20-month high two weeks ago, according to data from the USDA. The 20-month high was a result of US producers cutting herd sizes, and demand recovering after the swine flu outbreak.

The price for hogs for immediate delivery at slaughterhouses sank 1.5% yesterday to US$84.28 a pound. Hog futures for June settlement dropped 0.6% (0.525 cents) to US$85.325 a pound at 9:40 a.m. on the Chicago Mercantile Exchange. Wholesale prices dropped for two straight weeks to 89.85 cents a pound on May 10, from US$90.71 on April 26.

Meanwhile, cattle supplies are believed to be tightening in the future from lack of herd rebuilding. US beef supplies may total 28.537 billion pounds in 2011, the least since 1997, according to the USDA.

Cattle futures for June delivery rose 0.1% (0.1cents), to US$96.8 a pound on the CME, the eighth gain in nine sessions. Feeder-cattle futures for August settlement declined 0.3% (0.325 cents) to US$1.156 a pound.