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U.S. Hog Prices May Rise as Supply Ebbs, Paragon Economics Says

May 26 (Bloomberg) -- Hog prices may climb as much as 12 percent by August as supplies of animals available to U.S. meatpackers wane, said Steve Meyer, the president of Paragon Economics in Des Moines, Iowa.

Spot-market hogs may average 82 cents to 86 cents a pound in the third quarter because the weekly hog slaughter is expected to stay below 2 million head, Meyer said today in an interview in Chicago. Hogs for immediate delivery to slaughterhouses sold today for 76.82 cents a pound, U.S. Department of Agriculture data show.

“I don’t see a big move to the negative,” Meyer said. “We may see a decent rally before the Fourth of July.”

U.S. meatpackers processed 2.016 million hogs last week, down 2.4 percent from a year earlier, according to the USDA. Hog farmers have slashed breeding herds to the lowest level on record as high feed costs and shrinking pork demand led to losses in 2008 and 2009.

Spot hogs may drop to 72 cents to 76 cents a pound in the fourth quarter as supplies increase and pork demand declines after the summer-grilling season, Meyer said.

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

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

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