Dec. 17 (Bloomberg) -- Cattle futures extended a rally to a record amid signs of shrinking supplies of U.S. beef. Hogs fell.
Beef production will drop 5 percent to 24.68 billion pounds (11.2 million metric tons) next year, the U.S. Department of Agriculture projected on Dec. 11. Ranchers culled herds as the worst drought since 1956 eroded crop yields, sending the price of corn, the main ingredient in feed, to a record in August. The U.S. herd as of July 1 was the smallest since at least 1973.
“There’s just optimism out there from the standpoint of the reduced supply,” Chad Henderson, the president of Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in a telephone interview.
Cattle futures for February delivery climbed 0.7 percent to settle at $1.335 at 1 p.m. on the Chicago Mercantile Exchange, after reaching $1.337 a pound, the highest ever for the most-active contract. Prices are up 9.9 percent this year.
Wholesale beef increased 0.9 percent last week, the biggest gain since Nov. 23, USDA data show. Higher prices may start to erode consumer demand as U.S. economic growth slows, Henderson said.
Feeder-cattle futures for January settlement rose 0.8 percent to $1.5425 a pound on the CME.
Hog futures for February settlement dropped 0.8 percent to close at 84.75 cents a pound in Chicago. Prices are up 0.5 percent this year.
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