Hog Futures Jump as U.S. Demand for Bacon Increases; Cattle Prices Decline
Hog futures rose to the highest price in almost three weeks on signs that U.S. supplies of bacon are trailing consumer demand. Cattle declined.
Wholesale pork bellies, used to make bacon, jumped 7.9 percent yesterday to $1.3321 a pound, the highest price since at least January 1998, U.S. data show. Stockpiles monitored by the Chicago Mercantile Exchange fell to 14.109 million pounds last week, down 70 percent from 2009. Bacon demand tends to peak in the Midwest in August, when tomatoes are ready for harvest and more people eat bacon, lettuce and tomato sandwiches.
“The bacon market will probably lead pork products higher for the next several weeks,” said Paul Beere, a market adviser at Prime Agricultural Services in Brookfield, Wisconsin. Low supplies are “due to herd liquidation” and a rebound in demand, he said.
Hog futures for October settlement rose 1.125 cents, or 1.5 percent, to close at 78.075 cents a pound at 1:05 p.m. on the Chicago Mercantile Exchange, after touching 78.4 cents, the highest level for a most-active contract since July 9.
Hog futures have jumped 47 percent in the past year as pork supplies declined and demand recovered from the recession and the H1N1 virus, known as swine flu.
U.S. retail bacon prices climbed to $4.046 a pound in June, the highest level since at least 1980, according to the most recent Bureau of Labor Statistics data.
Pork-belly futures for August delivery rose 0.7 percent to $1.035 a pound, after yesterday jumping the CME’s 3-cent limit.
Cattle Market
Cattle futures for October delivery fell 0.725 cent, or 0.8 percent, to 93.475 cents a pound. The price has climbed 3.8 percent this month. Feeder-cattle futures for August settlement dropped 0.5 percent to $1.14275 a pound.
Cattle fell as declines in the stock market fueled speculation that beef demand will shrink as the economy slumps, said Troy Vetterkind, the owner of Vetterkind Cattle Brokerage in Chicago. The Standard & Poor’s 500 Index dropped as much as 1.2 percent, before paring the loss to trade little changed. Wholesale choice-beef prices fell 0.6 percent at midday to $1.5378 a pound.
“Cattle broke because the stock market broke, and the cash trade is coming in a little lower and boxed beef was a little lower,” Vetterkind said.
To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.
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