July 23, 2010

US hog futures advance as higher prices boost demand

Hog futures rose for the second straight day as a jump in US pork prices signaled meat demand is outpacing supplies

Wholesale pork gained 1.5% earlier to 84.03 cents a pound, the highest level since June 24, government data show. Meatpackers processed 1.571 million hogs in the first four days of this week, down 1.6% from the same time last week. The US hog herd was 3.6% smaller on June 1 than a year earlier after losses spurred farmers to cut output.

Hog futures for October settlement rose 0.775 cent, or 1%, to 76.4 cents a pound on the Chicago Mercantile Exchange. The price jumped 1.5% on Thursday (July 22). The most- active contract has climbed 33% in the past year.

After livestock markets closed, the USDA reported that pork stockpiles shrank 29% in June from a year earlier as production declined and exports rebounded.

Meanwhile, cattle futures for October delivery fell 0.525 cent, or 0.6%, to 94.4 cents a pound, ending a seven-session rally. Feeder-cattle futures for August settlement rose 0.25 cent, or 0.2%, to US$1.149 a pound.

US feedlots boosted purchases of young cattle in June by 19% from a year earlier as five straight profitable months encouraged operators to expand, according to analysts.

Cattle placed onto feedlots in June may be ready for slaughter from December through February, analysts said.

Futures pared losses on speculation that hot weather in the southern Great Plains will curb cattle weights, reducing beef supplies, analysts said. Heat indexes in Kansas, Oklahoma and Missouri may reach 110 degrees Fahrenheit (43 degree Celsius), according to the National Weather Service.