Cattle Slump as Downgrades Erode Equities, Commodities; Hog Futures Rise
Cattle futures fell the most in a year after cuts in the credit ratings for Greece and Portugal sparked declines in U.S. equities and commodities, as investors sought less-risky assets. Hogs rose.
Standard & Poor’s slashed Greece’s credit rating to junk, and cut Portugal’s by two steps, spurring gains in haven assets including the dollar and gold. The Reuters/Jefferies CRB Index of 19 raw materials slumped as much as 2 percent, led by declines in metals, sugar and oil. The S&P 500 Index of equities also dropped as much as 2 percent.
“With crude oil lower like it is and the stock market lower, you run into some problems here,” said Lane Broadbent, a vice president of KIS Futures Inc. in Oklahoma City. “With the stock market selling off, some of these funds may want to get out of positions” in cattle, he said.
Cattle futures for June delivery sank 1.775 cents, or 1.9 percent, to 93.725 cents a pound on the Chicago Mercantile Exchange, the biggest drop for a most-active contract since April 20, 2009. Cattle have gained 15 percent in the past year as beef demand increased and supplies shrank.
Feeder-cattle futures for August settlement dropped 1.025 cents, or 0.9 percent, to $1.15925 a pound.
Hedge funds and other large speculators held record net- long positions, or bets for a price increase, in cattle futures as of April 20, according to government data. Concern about the global economy may spur those investors to reduce their holdings, Broadbent said.
Wholesale choice beef advanced to $1.7041 a pound at midday, the highest since July 2008, U.S. Department of Agriculture data show.
Hog futures rose for the first time in four sessions as surging wholesale-pork prices raised speculation that demand for the meat is increasing as U.S. supplies tighten.
Wholesale pork climbed 0.5 percent yesterday to 90.71 cents a pound, the highest level since August 2008, according to the USDA. Demand for meat is rising as the weather warms in North America and more people grill outdoors, said Don Roose, the president of U.S. Commodities Inc.
“The retailer and wholesaler continue to be the ones that pay up,” Roose said from West Des Moines, Iowa. “We’ve just got tight supplies here yet, and peak grilling season is still ahead of us.”
Hog futures for June settlement rose 0.675 cent, or 0.8 percent, to 84.95 cents a pound on the CME. The most-active contract has gained 24 percent in the past year, as extended losses spurred producers to cut supplies, and as demand recovered from an outbreak of swine flu last year.
To contact the reporter on this story: Whitney McFerron in Chicago at firstname.lastname@example.org.