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Cattle Rally Most in 6 Weeks as U.S. Supply Tightens; Hogs Drop

Cattle futures rose, heading for the biggest gain in six weeks, on signs of tightening U.S. cattle supplies and improved beef exports. Hog prices fell.

Feedlots probably purchased or placed 8.3 percent fewer cattle in August than they did in the same month last year, according to the average estimates of 14 analysts in a Bloomberg survey. The U.S. Department of Agriculture will release inventory figures at 3 p.m. tomorrow. The number of animals being added to the feedlot herd declined in May, June and July from a year earlier, USDA data show.

“We’re getting evidence of a shortfall of available beef from December through April,” Rich Nelson, the chief strategist at Allendale Inc. in McHenry, Illinois, said in a telephone interview. “People have to be aware of winter shortages.”

Cattle futures for December delivery rose 0.7 percent to $1.298 a pound at 11:31 a.m. on the Chicago Mercantile Exchange. A close at that price would mark the biggest gain for a most-active contract since Aug. 8. The December contract has rallied 5.7 percent since touching a low of $1.22775 on May 20.

Feedlot operators typically buy year-old animals that weigh 500 pounds (227 kilograms) to 800 pounds, called feeders. The cattle are fattened on corn for four to five months until they weigh about 1,300 pounds, when they are sold to meatpackers.

Export sales of beef totaled 17,169 metric tons (37.85 million pounds) in the week ended Sept. 12, and sales in the past four weeks are 26 percent above the year-earlier average, according to USDA data.

Feeder-cattle futures for October settlement rose 0.5 percent to $1.5915 a pound.

Hog futures for December settlement fell 0.7 percent to 87.375 cents a pound on the CME.

To contact the reporter on this story: Dalton Barker in Chicago at dbarker40@bloomberg.net

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

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