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Cattle Futures Rise, Cap Biggest Monthly Gain in Year; Hog Prices Advance
Cattle rose, capping the biggest monthly gain in a year, amid signs that shrinking U.S. herds and lighter animals are limiting beef supplies. Hogs also gained.
Steer carcasses in the U.S. weighed about 859 pounds (389 kilograms) in the first three days of this week, or 2.9 percent less than a year earlier, U.S. Department of Agriculture data show. The U.S. cattle herd on July 1 was the smallest for the date since at least 1973 as losses in the last two years spurred farmers to cut output.
“The herd is continuing to see some liquidation,” said David Kruse, the president of CommStock Investments Inc. in Royal, Iowa. “The supply side is pretty well managed.”
Cattle futures for October delivery rose 1.125 cents, or 1.2 percent, to close at 94.6 cents a pound at 1 p.m. on the Chicago Mercantile Exchange. This month, the price gained 5.1 percent, the most since July 2009.
By tomorrow, meatpackers will have processed 654,000 head of cattle this week, down 1.8 percent from a week earlier, according to USDA estimates.
Feeder-cattle futures for August settlement were unchanged at $1.13725 a pound. Futures for September settlement fell 0.075 cent to $1.142.
Hogs, Pork Bellies
Hog futures for October settlement rose 0.95 cent, or 1.2 percent, to 79.025 cents a pound. The price has gained 50 percent in the past year as U.S. farmers slashed herds and pork demand recovered from the recession and swine flu.
Yesterday, the wholesale price of pork bellies, used to make bacon, extended a rally to $1.3333 a pound, the highest level since at least January 1998, according to USDA data.
Stockpiles of pork bellies in warehouses monitored by the CME have tumbled 73 percent from a year earlier. Futures have surged 70 percent in the past 12 months.
“There’s nothing to say that the rally’s over with, and we may end up with a similar situation in hams,” Kruse said. “This fall, with less in cold storage and with hog numbers not what they have been, we could see a better ham market ahead.”
To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.
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