July 21, 2010

US hog futures decline as consumption may slow; cattle rose

Hogs fell the most in more than two weeks on speculation that a decelerating US economy will reduce demand for pork; while cattle rose as hot weather in the Great Plains may slow weight gains and reduce beef supplies.

US housing starts declined in June to the lowest level since October following the expiration of a federal-tax incentive. Payrolls decreased in 27 states in June, led by California and New York, signalling a broad retrenchment in job creation, data from the Labour Department showed. Before today, wholesale pork prices increased 21% this year.

Hog futures for October settlement fell 1.275 cents, or 1.7%, to 74.5 cents a pound on the CME, the biggest drop since July 2. The most-active contract has risen 14% this year on higher export demand.

Cattle futures rose on speculation that temperatures above 100 degrees Fahrenheit (38 degrees Celsius) in parts of the southern Great Plains this week will harm or kill livestock, analysts said.

The average weight of steer carcasses in the eight largest producing states fell 2.4% to 861 pounds in the week ended July 18 from 882 pounds a year earlier, the USDA said in a report.

Meanwhile, cattle futures for October delivery rose 0.1 cent, or 0.1%, to 94.5 cents a pound in Chicago, capping the first six-day gain since March. Earlier, the price touched 94.65 cents, the highest level for a most-active contract since May 14.

Feeder-cattle futures for August settlement rose 0.05 cent to US$1.14475 a pound.