July 29, 2010

US hog futures rise on signs of shrinking supply

Hog futures rose for the second straight day on speculation that demand for US pork is outpacing the supply of animals to slaughterhouses.

Wholesale pork climbed to 86.86 cents a pound yesterday, the highest level since June 1, according to the USDA. Meatpackers processed 1.16 million hogs in the first three days of this week, 6.9% fewer than last year. In June, the US herd was 3.6% smaller than a year earlier after two years of losses spurred farmers to cut supply.

Hog futures for October settlement rose 0.725 cent, or 1%, to close at 76.95 cents a pound at 1:08 p.m. on the CME. The price has jumped 46% in the past year as supplies shrank and demand recovered from the recession.

In May, US pork exports rose 18% to 362.8 million pounds (164,600 tonnes) from a year earlier, according to the most-recent USDA data.

Meanwhile, cattle futures for October delivery rose 0.275 cent, or 0.3%, to 94.2 cents a pound. The most-active contract is up 4.6% this month. Feeder-cattle futures for August settlement dropped 0.25 cent, or 0.2%, to US$1.1485 a pound.

Packers processed 384,000 cattle in the first three days of this week, down 0.5% from a week earlier, according to the USDA. Feedlots bought 1.628 million young cattle last month, fewer than analysts estimated, the USDA said July 23.

Cattle futures earlier fell to the lowest price since July 15 on speculation that slowing beef shipments by meatpackers signal US demand is shrinking.

Earlier, packers shipped 2.77 million pounds of choice beef, the lowest amount since July 2, USDA data show. Demand in the US tends to slacken in late July and early August as temperatures peak and demand rises.