May 12, 2011

US hog futures decrease and cattle remains stable

US hog futures decline due to rumours that supplies may rise after corn prices plummeted which will halt feed costs for producers whereas cattle futures stay consistent.

Corn futures tumbled the most in eight weeks after the government forecast higher US inventories than analysts expected. The drop in the grain, the main ingredient in livestock feed, prompted speculation that producers may expand herds, increasing meat supplies, said an analyst.

"Hog futures were definitely pressured by the sharp drop in corn prices," Houghton said. The slump eased concerns about the high feed costs, he said.

Hog futures for June settlement fell US$0.25, or 0.3%, to settle at 93.225 cents a pound on the Chicago Mercantile Exchange. The price has increased 9.3% in the past year.

Corn prices have surged 80% in the past 12 months. Supplies are still very tight, the analyst said, and wet weather from Ohio to North Dakota has delayed planting this year.

Cattle futures for June delivery declined 0.125 cent to US$1.0905 a pound. The commodity has climbed 14% in the past year on rising export demand for beef.

Feeder-cattle futures for August settlement rose 0.65 cent, or 0.5%, to US$1.33025 a pound.