October 7, 2010

 

US hog futures drop due to increasing animal supplies

 

US wholesale pork fell 2.5% to US$0.085, the lowest level since July 21, due to signs that animal supplies are outpacing US demand for pork.

In the week ended October 2, the average weight of hogs slaughtered in the Iowa-Southern Minnesota region rose 0.9% to 122.8 kilogrammes from a year earlier, the US Department of Agriculture said.

Prices fell because of concern about weakness in the wholesale market, said Dan Vaught, the owner of Vaught Futures Insights in Altus, Arkansas. "Traders are concerned that the rise in weights and supply of hogs available for sale in the very near future is increasing as well," he said.

Hog futures for December settlement fell US$0.05, or 0.1%, to settle at US$0.72. Earlier, the price had dropped as much as 0.7%. The commodity has climbed 10% this year.

Wholesale pork-belly prices fell 12%, the biggest decline since August 2009, to US$1.075 a pound, according to USDA data. Pork bellies are cured and sliced to make bacon.  The price was down for the 11th straight session, tumbling 32%. It rose to a record US$1.573 on September 16.

Pork-belly futures for February delivery fell by the CME's daily limit of US$0.03 cents, or 2.8%, to close at US$1.045.

Cattle futures for December delivery dropped US$0.06 cent, or 0.6%, to settle at US$0.97. Earlier the price touched US$0.97, the lowest level for a most-active contract since September 9. The commodity had gained 13% in 2010.

Feeder-cattle futures for November settlement fell US$0.25, or 0.2%, to settle at US$1.09.