Hog futures fell the most in seven weeks after a government report showed that the U.S. herd unexpectedly grew. Cattle prices dropped.
The U.S. herd increased 0.3 percent to 68.36 million hogs from 68.172 million, the U.S. Department of Agriculture said Sept. 27. Ten analysts in a Bloomberg News survey projected a 1 percent decline, on average. The inventory of animals available for slaughter also topped forecasts.
“The hogs, for market, are there, and the slaughter numbers will come,” Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago, said in a telephone interview.
Hog futures for December settlement fell 1.7 percent to close at 86.625 cents a pound at 1 p.m. on the Chicago Mercantile Exchange, the biggest drop since Aug. 7. Prices touched 86.275 cents, the lowest since Sept. 23. Volume was 19 percent higher compared with the average of the prior 100 trading sessions.
As of Sept. 27, cash-hog prices were up 23 percent from a year earlier after U.S. slaughter rates declined. Hog slaughter is estimated to increase 1 percent in November and December from 2012, according to Chris Hurt, a professor of agricultural economics at Purdue University in West Lafayette, Indiana.
The gain in the hog herd signaled an outbreak of porcine epidemic diarrhea virus may have caused fewer pig deaths than forecast. The virus has been identified in 17 states since April, according to the American Association of Swine Veterinarians. Mortality in piglets is as high as 100 percent, a National Animal Health Laboratory Network report showed Sept. 25.
Cattle futures for December delivery fell 0.1 percent to $1.31975 a pound on the CME. Prices gained for eight sessions through Sept. 27, the longest stretch since November 2008. Feeder-cattle futures for November settlement rose 0.2 percent to $1.652 a pound.