July 2, 2010

Hog futures gain on predicted rise of US pork exports, cattle declines

Hog futures climbed for the second straight day on speculation that US pork exports will increase as the dollar drops whereas cattle fell, erasing earlier gains.

The greenback slumped to the lowest level since mid-May against a basket of six major currencies. In the four months ended April 30, pork exports were 1.5% higher than a year earlier, according to the most-recent USDA data. The US sold 21% more beef to overseas buyers in the four weeks ended June 24 than a year earlier, according to the USDA.

"One of the good things going on today is the dollar is lower. For the countries that do have some money, the cheaper dollar makes our meat look a little more viable," said Lawrence Kane, a market adviser at Stewart- Peterson Group in Yates City, Illinois.

Hog futures for August settlement rose 0.2% to US$0.8185 a pound on the Chicago Mercantile Exchange. Yesterday, the price gained 0.9%. In the second quarter, the commodity declined 1.5%, snapping a six-month rally.

Cattle futures for August delivery fell to US$0.8995 a pound. In the second quarter, the most-active contract dropped 3.8%, the first decline in more than a year.

Feeder-cattle futures for August settlement slid 0.4% to US$1.126 a pound.

Cattle eased on speculation that US meatpackers will slow livestock purchases as they reduce slaughtering before the Independence Day holiday on July 4. Some grocers may wait until next week to restock meat, Kane said. Wholesale choice beef fell 0.1% at midday to US$1.5536 a pound, the first drop this week, according to the USDA.

"With the long weekend, packer activity is diminishing rapidly," Kane said. Food retailers bought already for the Fourth of July, so everybody is waiting and seeing what disappears, before they look next week to see what they need to buy.