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Hog Futures Gain on Increased Virus Risk for Herds; Cattle Rise

Oct. 24 (Bloomberg) -- Hog futures jumped the most in a week on mounting concern that the spread of a pig virus on U.S. farms will limit supplies for pork processors. Cattle prices increased.

The disease, called porcine epidemic diarrhea virus, has emerged in herds across 18 states since April, with an undisclosed number of deaths and 768 confirmed reports, the American Association of Swine Veterinarians said in an Oct. 17 report on its website. The PED virus slows the growth of older hogs and has as much as a 100 percent mortality rate for suckling pigs, which are 3-weeks old or younger, according to the Iowa Pork Industry Center said.

“Everybody was concerned that they’d have another flare-up” of the disease, Jason Golly, a vice president of risk-management marketing at Lynch Livestock Inc. in Waucoma, Iowa, said in a telephone interview.

Hog futures for December settlement increased 1.6 percent to close at 89.6 cents a pound at 1 p.m. on the Chicago Mercantile Exchange, the biggest gain since Oct. 15. The contract is up 3.4 percent this month.

Cattle futures for December delivery rose 0.1 percent to $1.32875 a pound on the CME. Prices are up 0.6 percent since Oct. 18, heading for the biggest weekly gain this month, and have rallied 10 percent since the end of May.

The cost of cattle will remain high through 2014 because of tight beef supplies, Mike North, a senior risk management adviser at First Capitol Ag, said in an interview in Chicago. Cash prices may get as high as $1.35 a pound next year, said North, who is based in Platteville, Wisconsin. Consumer resistance to higher beef costs will prevent further gains in cattle prices, he said.

Spot steers averaged $1.3236 a pound in the first three days of this week, up 5.5 percent from the same period a year earlier, U.S. Department of Agriculture data show.

Feeder-cattle futures for January settlement declined 0.5 percent to $1.667 a pound.

To contact the reporter on this story: Dalton Barker in Chicago at dbarker40@bloomberg.net

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

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