Hogs Futures Drop on Signs Demand to Slow After U.S. Holiday; Cattle Fall

Hog futures fell the most in a month on signs that U.S. demand will wane as supplies rise. Cattle had the biggest drop since May.

Last week, wholesale pork dropped 2.4 percent to 91.31 cents a pound, the biggest drop since mid-July. Grocers stepped up buying before the Labor Day holiday on Sept. 6, when many people grill outdoors. As the U.S. autumn approaches, supplies of the meat usually increase, said Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois.

“Holiday demand is wrapped up with the last major holiday of summer done,” Nelson said. Prices may ease as “supplies increase going into fall,” he said.

Hog futures for October settlement fell 1.6 cents, or 2.1 percent, to settle at 75.6 cents a pound at 2:07 p.m. on the Chicago Mercantile Exchange, the biggest drop for a most-active contract since Aug. 6. The price has climbed 15 percent this year.

Cattle futures for October delivery fell 2.1 cents, or 2.1 percent, to settle at 96.35 cents a pound, the biggest drop since May 14. The commodity has gained 12 percent this year.

“Prices have already posted a very strong rally in recent days,” Nelson said. “Maybe we’ve gone a little too high, too fast.”

Wholesale choice-beef prices dropped 0.6 percent to $1.6175 a pound today, the lowest level since Aug. 19, U.S. Department of Agriculture data showed. The Standard & Poor’s 500 Index fell on concern the European debt crisis may widen, and the dollar rose against a basket of six major currencies, eroding the appeal of U.S. meat exports.

“This sovereign debt issue” may damp economic growth and erode beef demand, said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago.

Feeder-cattle futures for October settlement fell 2.65 cents, or 2.3 percent, to $1.12425 a pound, the biggest drop since June 2, 2009. The commodity has jumped 17 percent in 2010.

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net.

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