Hogs Rise as U.S. Wholesale Pork Extends Rally; Cattle Drop

Hog futures rose for the second time in three days as U.S. pork prices extended a rally, renewing concern that meat supplies are shrinking. Cattle fell.

Wholesale pork climbed for a seventh session yesterday to 72.46 cents a pound, the highest level since Jan. 26. Hog weights averaged 202.8 pounds (92 kilograms) on Feb. 22, down 1.3 percent from a year earlier, government data show. Cold weather and reduced corn quality have kept animals from getting heavier, said Dick Quiter, a broker at McFarland Commodities LLC in Chicago. Lighter hogs yield less pork.

“If you’re slaughtering 400,000-plus head of hogs a day but they’re all weighing less, you’re taking a lot of meat off the balance sheet,” Quiter said.

Hog futures for April settlement advanced 0.9 cent, or 1.3 percent, to 70.35 cents a pound on the Chicago Mercantile Exchange. The most-active contract has climbed 7.2 percent this year.

Rising U.S. exports may be straining pork supplies, boosting hog prices, said Doug Harper, an analyst at Richard A. Brock & Associates, a Milwaukee-based brokerage.

Frozen-pork inventories at the end of January were 18 percent smaller than a year earlier, the Department of Agriculture said on Feb. 22. The U.S. exported 363.7 million pounds of pork in December, up 17 percent from a year earlier, the USDA said on Feb. 17.

Export Outlook

“The cold-storage report indicated good movement through January, so you have to assume demand is better than a year ago,” Harper said. “The consensus seems to be that pork is moving very well into the export market.”

Cattle futures for April delivery fell 0.5 cent, or 0.5 percent, to 91.925 cents a pound. The price has climbed 6.7 percent this year. Feeder-cattle futures for April settlement were unchanged at $1.02475 a pound.

Spot prices may be peaking, McFarland’s Quiter said. Cash steers sold for 91.3 cents a pound yesterday, little changed from last week after gaining almost 3 cents from two weeks ago, according to USDA data.

“We have to be a little careful, because we’ve put so much on the cash market the past few weeks,” Quiter said. Prices climbed as cold, snowy weather across the Great Plains curbed animal weight gains, he said.

Wholesale choice beef climbed 0.3 percent at midday to $1.5024 a pound, the highest level since April, according to the USDA.

Source: Bloomberg