US hog futures drop on higher wholesale pork prices

Hogs fell for the second time in three sessions on speculation that the highest wholesale-pork prices in the US since 2008 will slow grocers' purchases.

On Thursday (May 13), wholesale pork climbed to 91.3 cents a pound, the highest since August 2008, USDA data show. Retailers may cut back on meat buying as they finish filling orders before Memorial Day weekend at the end of May, a holiday when many US consumers grill outdoors, said Don Roose, the president of US Commodities Inc. in West Des Moines, Iowa.

Hog futures for June settlement declined 0.225 cent, or 0.3%, to 85.425 cents a pound at 9:29 a.m. on the CME. Earlier, the most-active contract increased 24% in the past year as producers cut herds and pork demand recovered from the recession and swine flu outbreak.

A higher dollar also raised speculation that pork exports will shrink, Roose said. The dollar climbed as much as 0.5% against a basket of six world currencies, and is near the highest level since April 2009.

In March, US pork exports were little changed from a year earlier at 370.4 million pounds, the USDA said. In the first three months of 2010, pork exports were 1.3% larger than a year earlier.

Meanwhile, cattle futures for August delivery fell 0.05 cent to 94.65 cents a pound. The most-active contract was up 13% in the past year, before today. Feeder-cattle futures for August settlement climbed 0.025 cent to US$1.148 a pound.

Shrinking cattle supplies spurred meatpackers in Nebraska, the second-largest US cattle producing state after Texas, to boost spot-market bids earlier, according to traders. Cash steer carcasses sold for US$1.6255 a pound on Thursday, more than 2 cents higher than a week earlier, USDA data show.

Rallies may be limited on concern that high beef prices will curb consumer demand, Hackney said. Wholesale choice beef declined to US$1.7008 a pound at midday, down 0.8% since reaching a 22-month high on May 11.

Feeder-cattle futures for August settlement climbed 0.25 cent to US$1.15025 a pound.