Bloomberg News

Cattle Prices Climb on Rising Demand for U.S. Beef; Hogs Drop

October 17, 2011

Oct. 17 (Bloomberg) -- Cattle futures rose for a third session, extending a rally that sent prices to a record last week, on signs that supplies of U.S. beef are shrinking as demand increases from overseas buyers. Hogs fell.

U.S. exporters shipped 1.9 billion pounds (847,913 metric tons) of beef in the eight months through Aug. 31, up 27 percent from the same period a year earlier, Department of Agriculture data show. Canada, Mexico and Japan were the top buyers. The U.S. herd totaled 100 million head on July 1, the smallest since at least 1973, government data show.

“That August trade data was very supportive,” Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The beef export situation is quite bullish.”

Cattle futures for December delivery rose 0.2 percent to $1.234 a pound at 9:46 a.m. on the Chicago Mercantile Exchange. In the previous session, prices reached $1.243, the highest ever for a most-active contract. Before today, the commodity advanced 14 percent this year.

Feeder-cattle futures for November settlement rose less than 0.1 percent to $1.445 a pound on the CME.

Hedge funds increased their net-long positions in cattle futures and options by 3.7 percent to 101,532 contracts in the week ended Oct. 11, the highest since April 19, data from the U.S. Commodity and Futures Trading Commission show.

Last week, wholesale beef climbed 0.3 percent to $1.85 a pound, the second straight weekly gain, USDA data show. Prices are up 13 percent this year.

Hog futures for December settlement dropped 0.3 percent to 89.8 cents a pound on the CME. Before today, the commodity rose 13 percent this year.

--Editors: Steve Stroth, Patrick McKiernan

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

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


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