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Cattle Futures Extend Rally Amid Tight U.S. Supply; Hogs Decline

Cattle futures rallied in Chicago, touching a record in electronic trading, on speculation that U.S. supplies will shrink. Hog prices slid.

Domestic beef output in the first three months of 2013 will be 6.105 million pounds (2.77 million metric tons), down 6.5 percent from the fourth quarter and 2.8 percent lower than a year earlier, the U.S. Department of Agriculture has projected. Cattle futures are up 9.2 percent this year as the U.S. herd shrank.

The supply of cattle tends to “tighten up going into the winter,” Ryan Turner, a risk-management consultant at FCStone Group Inc., said in a telephone interview from Kansas City, Missouri. “We’re going to see tighter supplies going into January, February and March.”

Cattle futures for February delivery climbed 0.9 percent to settle at $1.326 a pound at 1 p.m. on the Chicago Mercantile Exchange. After the close, prices reached $1.3295 in electronic trading, the highest for the most-active contract. Cattle last reached a record on Nov. 23.

Prices, up 10 percent since the end of June, also are getting “really good technical support” after the February contract topped $1.30, Turner said.

Feeder-cattle futures for January settlement slid less than 0.1 percent to $1.53075 a pound on the CME, halting a seven- session rally.

Hog futures for February settlement slumped 0.6 percent to close at 85.4 cents a pound in Chicago. That was the first decline in five sessions, narrowing this week’s advance to 2.3 percent. Futures still are up 1.3 percent this year.

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

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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