November 30, 2010

US hog and cattle prices decline on slackening demand

Hog futures had the biggest drop in almost two weeks on signs of slackening demand for US pork and increasing supplies of animals available for slaughter, while cattle also declined.

On November 26, wholesale pork fell for the first time in more than a week, according to USDA data. Demand has peaked for the year and supplies are ample after meatpackers processed 4.2% more hogs in October than in September, said an analyst.

"We have already purchased the hogs which were needed to be killed for the Christmas holiday," the analyst said. "That meat is in the pipeline now."

Hog futures for February settlement fell US$0.00925 or 1.2%, to settle at US$0.7623 a pound on the Chicago Mercantile Exchange. It is the biggest decline for the most-active contract since November 16. The price has gained 16% this year.

The average hog carcass weighed 208.09 pounds (94.4 kilogrammes) on November 24, up 0.3% from November 28, USDA data showed.

Hogs also fell on concern that escalating tensions between North and South Korea will hurt demand for US meat exports.

South Korea, the sixth-largest buyer of US pork, said it plans to conduct artillery drills tomorrow on the island shelled by North Korea last week.

Cattle futures for February delivery fell US$0.00045 or 0.4%, to US$1.0578 a pound. The price has gained 23% this year.

Feeder-cattle futures for January settlement dropped US$0.0035 or 0.3%, to US$1.184 a pound.