Bloomberg News

Hog Prices Slide on Signs of Rising Pork Supplies; Cattle Steady

August 20, 2012

Hogs fell for the first time in three sessions on signs of rising U.S. pork supplies as producers sent more animals to slaughter because of higher feed costs amid the widespread drought. Cattle were little changed.

Meatpackers processed 2.166 million hogs in the week ended Aug. 18, up 6.6 percent from the previous week, according to the U.S. Department of Agriculture. Carcass weights averaged 202.72 pounds (92 kilograms) on Aug. 16, up 2 percent from a year earlier, USDA data show. Futures dropped 5.1 percent this month through Aug. 17.

“We are really going to challenge this hog market with huge production,” Dennis Smith, an analyst at Archer Financial Services, said in a telephone interview from Chicago. “Sow slaughter is on the increase, and average hog weights are heavy and starting to move higher.”

Hog futures for October settlement fell 0.4 percent to 75.875 cents a pound at 11:01 a.m. on the Chicago Mercantile Exchange. Prices are down 9.6 percent this year through Aug. 17.

More than half of the Midwest in is “severe” drought as of the week ending Aug. 13, according to the U.S. Drought Monitor. The price of corn, the main ingredient in livestock feed, surged 60 percent from June 15 through Aug. 17.

Cattle futures for October delivery added 0.1 percent to $1.254 a pound on the CME. Prices are up 3.1 percent in 2012 through Aug. 17.

Wholesale beef rose 4.4 percent last week to $1.9303 a pound, the highest since July 5, government data show. Grocers are increasing meat purchases before the Labor Day holiday on Sept. 3, when consumers often grill outdoors, said Dick Quiter, an account executive at McFarland Commodities LLC in Chicago.

Feeder-cattle futures for October settlement gained 0.4 percent to $1.44025 a pound in Chicago.

To contact the reporter on this story: Elizabeth Campbell in Chicago at

To contact the editor responsible for this story: Steve Stroth at

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