October 8, 2010

 

US pork prices hit seven-month low

Prices of lean hogs set their lowest for seven months on Thursday (Oct 7) to US$81.56 per carcass, down 8.2% so far this month, and led by a 30% slump in prices of pork bellies.

 

"The pork cut out plummeted again," Mike Mawdsely at Market 1 said.

 

"Cash belly prices are in freefall," Terry Roggensack at Hightower Report said.

 

The size of the decline bit into the steep discount that futures have been trading at to cash markets, and which has acted as a cushion to the collapse in pork prices.

 

"The short-term trend is still down for the cash market, and futures also look vulnerable to more fund selling," Mr Roggensack said, adding that higher animal weights were adding to the pressure on prices from rising supplies.

 

Chicago's best-traded December lean hog contract fell 0.7% to US$0.71675 a pound as of 10:30 GMT, the lowest for a nearest-but-one lot since February.

 

Chicago livestock prices often decline in the autumn, following the end of the barbecue season, and indeed cattle prices have shown signs of stabilising, after a downtrend which began later in August.

 

Prices of beef have held up better, especially of more expensive cuts, a resilience which ties in with data showing upper end US restaurants faring better than family dining establishments.

 

However, traders are also sensitive to avoiding a rally which typically sets in ahead of Christmas.

 

"From a longer-term perspective, hogs have a tendency to rally into November 15. Ham demand is usually the biggest driver," US Commodities said.

 

Mr Roggensack advised investors to "watch for technical signs of a low over the near-term".

 

In cattle, live cattle for December were 0.1% higher at US$0.9720 a pound while feeder cattle, those yet to go through feedlots, were 0.4% higher at 109.65 cents a pound.