Pork Up Beef Down, Bloomberg Report Says

Guess the Hog-Interest spin alleging no connection to swine flu was bought by the people "hook line and stinker, I mean "sinker."

Hog Futures Fall as U.S. Herd Cuts May Be Slowing; Cattle Drop
March 23, 2010, 1:00 PM EDT

By Whitney McFerron
March 23 (Bloomberg) -- Hog futures fell from a 12-year high on speculation that a government report this week will show U.S. producers are slowing cuts in the sow herd after making their first profits in two years. Cattle tumbled.

On March 26, the U.S. Department of Agriculture may report a slower pace of breeding-herd reductions, said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa. Supply cuts sparked a 25 percent jump in wholesale-pork prices in the past year. The meat sold for 73.47 cents a pound yesterday, down 0.5 percent from March 19, USDA data show.

“All eyes are focused on that report Friday afternoon,” Roose said. “The key thing people are looking for is: Have we stopped liquidation cold in its tracks and maybe even started some expansion? We’re back to profits after quarters of losses.”

Hog futures for June settlement dropped 1.025 cents, or 1.2 percent, to 81.825 cents a pound at 11:57 a.m. on the Chicago Mercantile Exchange. Yesterday, the price reached 83.5 cents, the highest level for a most-active contract since May 1997. Before today, the commodity was up 12 percent in the past year.

Pork-belly futures for May delivery rose 2.6 cents, or 2.8 percent, to 95.75 cents a pound. Earlier, the price jumped by the exchange limit of 3 cents. Yesterday, the USDA reported a 27 percent drop in supplies during the past year at U.S. warehouses with 55.6 million pounds at the end of February. Pork bellies are cured and sliced to make bacon.

Cattle Slide

Cattle futures for June delivery slid 1.625 cents, or 1.7 percent, to 92.45 cents a pound. A close at that price would be the biggest drop for a most-active contract since March 6, 2009. Feeder-cattle futures for May settlement declined 0.8 cent, or 0.7 percent, to $1.085 a pound.

Speculators may have sold contracts after cattle prices reached a 17-month high last week, said Troy Vetterkind, the owner of Vetterkind Cattle Brokerage in Chicago. In the week ended March 16, net-long positions, or bets on a rally, by hedge funds and other large speculators rose 1.8 percent to 93,700 cattle contracts, extending an advance to a record, government data show.

“We’re seeing some fund selling with ideas that we might have topped out the cash market,” Vetterkind said. Spot-market cattle in Texas, the biggest producing state, sold for about 97 cents a pound yesterday, little changed to 1 cent lower than last week, he said.

--Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net

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









http://www.businessweek.com/news/2010-03-23/hog-futures-fall-as-u-s-herd-cuts-may-be-slowing-cattle-drop.html