September 22, 2010

US hog futures peak amid shrinking supplies

Hog futures climbed to a three-week high as rising pork prices encourage US meatpackers to step up purchases as the herd declines.

Spot-market hog prices rose 1.6% earlier to 80.47 cents a pound, the highest in more than a week, government data show. Wholesale pork climbed to 91.87 cents, the highest since September 2.

Meatpackers processed 834,000 hogs in the first two days of this week, down 2.7% from the same time last year. In June, the US hog breeding herd was near the smallest size on record, as farmer losses in 2008 and 2009 spurred culls.

Hog futures for December settlement rose 0.3 cent, or 0.4%, to close at 77.075 cents a pound at 1 p.m. on the CME. The price earlier touched 78 cents, the highest price for a most-active contract since August 25, and the highest ever for the December contract. Futures have climbed 17% this year.

Meanwhile, cattle futures for December delivery fell 0.55 cent, or 0.5%, to US$1.0005 a pound. Futures have gained 16% this year. Feeder-cattle futures for November settlement climbed 0.075 cent to US$1.11025 a pound.