Cattle Rally to Record as Storm May Curb Meat Supply; Hogs Rise

Dec. 19 (Bloomberg) -- Cattle futures climbed to a record for the fourth straight session on speculation that a U.S. winter storm will lower animal weights and delay meat shipments, further shrinking beef supplies. Hogs rose to a two-week high.

Blizzard conditions are forecast for tonight and tomorrow with 2 inches to 5 inches (5 centimeters to 13 centimeters) of snow expected in the Central Plains and as much as 15 inches in parts of Iowa and Wisconsin, Joel Widenor, a vice president for Commodity Weather Group in Bethesda, Maryland, said in a telephone interview. During cold, wet weather, livestock need to use more energy to stay warm, leading to lower weights.

“Weather impeding livestock-weight gains and or transportation of either moving the animal or moving the product always sort of perks up the livestock markets,” Lawrence Kane, a market adviser at Stewart-Peterson Group, said in a telephone interview from Yates City, Illinois. “Some of the conditions are going to get pretty tough on livestock.”

Cattle futures for February delivery advanced 1.1 percent to close at $1.3435 a pound at 1 p.m. on the Chicago Mercantile Exchange. Prices rallied to a record $1.345, marking the fourth straight session that the contract has reached an all-time high.

Beef output will slump 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.

“We still are looking forward to tighter cattle supplies after the first of the year,” Kane said.

Feeder-cattle futures for March settlement added 0.9 percent to $1.5575 a pound on the CME.

Hog futures for February settlement rose 1.5 percent to settle at 86.575 cents a pound, after reaching 86.775 cents, the highest for the most-active contract since Dec. 3. Prices are up 2.7 percent this year.

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