November 27, 2008

Hog prices rose to a two-month high on speculation the size of the U.S. hog numbers will decrease, limiting supplies of pork. Cattle futures also increased as a result.

The U.S. hog herd was 68.7 million as of Sept. 1, up 1 percent from June 1, the Department of Agriculture said on Sept 26. The cost of feeding the animals has overshot wholesale pork prices, which have dropped 40 percent from a record 94.41 cents a pound on Aug 15.

Chad Henderson, a market analyst at Prime Agricultural Consultants Inc. in Brookfield, Wisconsin said that herd numbers are going to contract. "Some producers are going on about 15 months of losing money, and I don't know many who can handle that. We're getting the production turned back and set for lower numbers going into next year."

Hog futures for February settlement rose US$0.1175, or 1.8 percent, to US$0.6577 a pound on the Chicago Mercantile Exchange. Earlier, the price reached US$0.6645 cents, the highest for a most-active contract since Sept 26. The commodity is up 20 percent this month.

About 3.01 million female pigs are expected to give birth from September through November, down 5 percent from the same period in 2007, USDA data show. The number expected to give birth from December through February may drop to 2.98 million, the government said.

Cattle futures for February delivery rose 0.9 percent, to US$0.8815 a pound. The price still has dropped 4.9 percent this month.

Feeder-cattle futures for January delivery rose US$0.08, or 0.9 percent, to US$0.922 a pound.