Hog futures fell from the highest price in at least 24 years on signs that the rally was overdone.
The price has jumped 31 percent in the past year, reaching 92.125 cents a pound today, the highest for a most-active contract since at least 1986. The market became “overbought,” said Tom Cawthorne, the director of hog marketing at R.J. O’Brien & Associates in Chicago.
“We just kind of ran out of buyers,” Cawthorne said. “We’ve had such a big run-up. We’ve seen a lot of spreaders liquidating out of their positions” on April contracts and summer prices, he said.
Hog futures for April settlement fell 0.1 cent, or 0.1 percent, to settle at 90.025 cents a pound at 1 p.m. on the Chicago Mercantile Exchange. Yesterday, the commodity gained 3 cents, the most allowed by the CME.
The worst outbreak of foot-and-mouth disease in Asia for at least 50 years may get more severe as Lunar New Year holidays starting Feb. 2 spark a surge in travel, threatening to spread the virus, said Juan Lubroth, the chief veterinary officer at the United Nations’ Food and Agricultural Organization in Rome.
“Growing export demand is helping support the market, particularly with South Korea having liquidated about 25 percent of the breeding herd due to foot-and-mouth disease,” said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa.
In November, U.S. exporters shipped 406.2 million pounds (184,227 metric tons) of pork, the most since June 2008, according to the most-recent government data. The U.S. hog-breeding herd totaled 5.778 million sows on Dec. 1, close to the smallest ever, USDA statistics showed.
Cattle futures for April delivery fell 0.1 cent to settle at $1.12175 a pound. The commodity has climbed 26 percent in the past year.
Feeder-cattle futures for March settlement dropped 0.525 cent, or 0.4 percent, to $1.256 a pound.