US hogs drop on speculation of slowing herd cut

Hog futures in the US fell the most in almost eight weeks on speculation that a government report would show a slowdown in reductions in the country's breeding herd.

Producers held back 5.76 million sows for breeding as of March 1, down 3.9% from a year earlier, the USDA said after markets closed in Chicago; analysts expected a 2.3% drop. Futures may rise next week as the report showed a bigger cut than anticipated, said Dave Bauer of Brite Futures Inc.

Hog futures for June settlement fell 1.6 cents, or 2%, to 78.025 cents a pound on the CME, the biggest decline for a most-active contract since February 1. Futures dropped 5.5% for the week, the first weekly decline since early February.

Prices may open 1 cent to 2 cents higher on March 29 because of the declining herd size, Bauer said.

Futures were also pressured after wholesale pork slid 2.1% last week to 70.76 cents a pound, the lowest price since February 18, according to the USDA. Pork may drop further as US grocers likely have finished stocking up on hams for the April 4 Easter holiday, when the meat is a traditional meal. Wholesale ham is down 13% this month.

Meanwhile, cattle futures for June delivery slipped 0.55 cents, or 0.6%, to 91.575 cents a pound. Prices fell 3.7% for the week, the biggest weekly decline in more than a year. Feeder-cattle futures for May settlement declined 0.725 cents, or 0.7%, to US$1.0815 a pound.

Wholesale choice beef climbed to US$1.6269 a pound, the highest price since August 2008. Beef has risen partly because cold, wet US weather curbed cattle weight gains, reducing supplies of the meat. Steer carcasses averaged 855 pounds last week, 3.1% less than a year earlier.

As feedlots dry out and the weather warms in the US, cattle weights are likely to increase, boosting meat output, according to analysts.