Hogs Rise as U.S. Pork Exports Gain, Animal Supplies Drop; Cattle Decline

Hog futures rose for the first time in a week as U.S. pork exports increased and animal supplies fell. Cattle dropped, extending the longest slump in 10 months.

Wholesale pork reached a record 96.74 cents a pound on Aug. 24 and dropped 3.6 percent since then, U.S. data show. A 3.1 percent decline in futures last week was overdone because demand remains ample, said Parker McMahan, a senior account executive at Price Futures Group in Chicago. In the first half of 2010, the U.S. exported 7.9 percent more pork than a year earlier.

“We’ve had a nice pullback here in prices, but the world is not getting any smaller, and we’re not running out of mouths to feed,” McMahan said.

Hog futures for October settlement rose 0.05 cent to close at 74.875 cents a pound at 1 p.m. on the Chicago Mercantile Exchange. The most-active contract has gained 14 percent this year after losses in 2008 and 2009 prompted farmers to slash herd sizes.

Meatpackers processed 2.11 million hogs last week, or 4.2 percent less than a year earlier, U.S. Department of Agriculture data show.

Pork prices declined last week after grocers finished stocking up on meat for the U.S. Labor Day holiday on Sept. 6, when many people grill outdoors, said Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois.

Cattle Market

Cattle futures for October delivery declined 0.05 cent to 98.05 cents a pound, dropping for the fifth straight session, the longest slide since late October. The most-active contract is up 3.6 percent this month.

Feeder-cattle futures for October settlement slipped 1.075 cents, or 0.9 percent, to $1.15925 a pound.

Futures declined in tandem with U.S. equities amid speculation that demand for beef will shrink. The Standard & Poor’s 500 Index dropped 1.5 percent.

“The stock market should exert a minor bearish influence,” Nelson said.

Earlier, cattle climbed as much as 0.6 percent on speculation that U.S. slaughterhouses will buy more animals as beef prices increase. Meatpackers processed 678,000 cattle last week, up 1.6 percent from a week earlier, USDA data show. Wholesale choice beef has climbed 7.8 percent this month to $1.6374 a pound at midday.

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.

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