Hog futures surged the most in eight weeks as slumping U.S. pork prices fueled speculation that demand for the meat will increase as consumers shift from more- expensive beef or poultry cuts. Cattle declined.
The value of a 200-pound (91-kilogram) hog carcass fell to 79.41 cents a pound yesterday, a discount of $1.17 to the same amount of beef, according to the U.S Department of Agriculture. Meatpackers slaughtered 1.283 million hogs in the first three days of this week, up 1.6 percent from a year earlier, USDA data show. Smithfield Foods Inc. (SFD:US) said today that pork prices will rise in 2013 on reduced beef supplies.
“Pork has gotten cheap relative to beef, and supermarkets will take advantage of that discount,” David Kruse, a commodity trading adviser at Commstock Investments Inc. in Royal, Iowa, said in a telephone interview. “We are reaching the seasonal peak in hog slaughter and should see supplies begin to taper off 1 or 2 percent into the summer, further boosting demand for hogs.”
Hog futures for April settlement rose 2.5 percent to 81.2 cents a pound at 9:45 a.m. on the Chicago Mercantile Exchange, heading for the biggest gain since Jan. 11. Yesterday, the most- active futures touched 78.25 cents, the lowest since Nov. 7. The price through yesterday was down 7.6 percent this year.
Deutsche Bank AG advised clients today in a report to close short hog positions because pork has become a better value relative to chicken, which should attract more demand from consumers and retailers. The bank also said a USDA report on March 28 may show fewer hogs were bred in the quarter that ended March 1.
Cattle futures for April delivery slid less than 0.1 percent to $1.28775 a pound on the CME, heading for the third straight decline.
Feeder-cattle futures for May settlement rose 0.2 percent to $1.44875 a pound, after fluctuating between gains and losses.
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