December 11, 2008

Foreseen '09 lower beef supplies jack up US cattle prices

US cattle prices rose in two weeks on signs that the shrinking US herd may limit beef supplies next year while hog prices declined.

Cattle futures for February delivery rose 1.525 cents, or 1.9 percent, to 83.8 cents a pound on the Chicago Mercantile Exchange (CME), the biggest gain since November 24. The price has dropped 13 percent this year as the slumping global economy raised concerns that beef demand will decline.

Feeder-cattle futures for January delivery rose by 0.8 cents, or 0.9 percent, to 87.35 cents a pound.

The US feedlot herd fell 6.8 percent in October from a year earlier, the USDA said on November 21. The agency will release its next feedlot report on December 19.

Wholesale beef prices rose 0.37 cent, or 0.3 percent, to US$1.4508 a pound at midday, according to USDA data. Still, the price has decreased by 1.4 percent compared to last year.

Frozen pork-belly futures sank for a ninth straight session on signs of increasing supplies of the meat used for bacon.

Futures for February delivery tumbled the most at the CME, dropping 3 cents, or 3.4 percent, to 84.5 cents a pound. The most-active contract dropped by as much as the exchange limit in the previous three sessions.

Pork-belly inventories in warehouses approved by the CME rose 13 percent to 23.8 million pounds in the week ended December 5 from the previous week. Stockpiles have climbed for seven straight weeks and are down 2.8 percent from last year.