COMMODITIES : Pork Futures Fall as Large Hog Crop Goes to Slaughter
Pork futures prices plunged for the second straight day Tuesday on the Chicago Mercantile Exchange amid signs of an expected seasonal upturn in hog slaughters.
On other markets, grain and soybean futures rose sharply; precious metals drifted lower; energy futures advanced, and stock index futures retreated.
A recent pickup in hog slaughters suggests last spring’s unusually large pig crop is beginning to come to market at least two weeks later than expected, analysts said.
Supplies of fattened hogs typically rise in August, but this year’s crop--the largest in five years--was held back by producers fearful of transporting the sensitive animals in the recent record-breaking heat wave.
“You usually see the slaughter reach its lowest point in July; then it increases into November,” said Thomas Morgan, president of Sterling Research Corp. of Arlington Heights, Ill.
Frozen pork belly futures finished down nearly the 2-cent-a-pound limit Tuesday following limit losses on Monday, while hogs for December and February delivery lost more than a penny a pound.
Because of the large spring pig crop, slaughters during the fall-winter period are expected to run 7% above last year’s level, and hefty supplies of frozen pork will put additional pressure on prices, said Chuck Levitt, livestock market analyst with Shearson Lehman Hutton Inc. in Chicago.
“The market is jittery because we’re going into the fall season with an 87% increase in frozen pork stocks from last year,” he said.
Expectations of the seasonal slaughter increase were offset last week by a strong cattle futures market, which kept prices in the adjacent pork pits from falling sharply, Levitt said.
Wheat Leads Way
But meatpackers now have all the cattle they need to meet the Labor Day weekend demand, so cattle prices weakened Tuesday.
Live cattle settled 0.08 cent to 0.88 cent lower, with the contract for delivery in October at 72.40 cents a pound; feeder cattle were 0.40 cent to 0.83 cent lower, with September at 81.82 cents a pound; hogs were 0.20 cent to 1.08 cents lower, with October at 39.15 cents a pound; frozen pork bellies were 1.33 cents to 1.97 cents lower, with February at 50.87 cents a pound.
Grain and soybean futures finished sharply higher on the Chicago Board of Trade with the wheat market leading the way on news that China and India each were seeking to buy 300,000 metric tons of subsidized U.S. wheat.
After the close, the Agriculture Department announced that it had accepted bids to cover the sale of 200,000 metric tons of wheat to India.
Corn futures prices got an additional boost from news that a federal magistrate in St. Paul, Minn., had recommended that the Agriculture Department be ordered to extend indefinitely crop price support loans scheduled to mature on Wednesday.
The recommendation, if accepted by the judge hearing a case brought by several farmers, would delay the release of 400 million to 500 million bushels of corn onto the market.
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