By Molly Seltzer
July 31 (Bloomberg) -- Hogs rose to a five-week high as U.S. pork demand improves and high grain costs force producers to slaughter animals at lighter weights. Cattle also rose.
Processors slaughtered 5.5 percent more hogs this week than a year earlier, and wholesale pork prices are the highest in four years, U.S. Department of Agriculture data show. Hogs sold to slaughterhouses in the Iowa-Southern Minnesota area were 0.9 percent
lighter last week than a year earlier, USDA data show.
``In the hog market, the weights have dropped significantly below last year, and that has to do with the corn price being as high as it is,'' said
Doug Conti, an analyst at Midwest Market Solutions in Yankton, South Dakota. ``They're marketed at lighter weights, and we continue to see that as a supportive factor for futures.''
Hog futures for October settlement rose 1.8 cents, or 2.5 percent, to 74.35 cents a pound on the Chicago Mercantile Exchange, the highest since June 24. Hog futures gained 4.9 percent in July and 29 percent this year.
Wholesale pork rose 0.77 cent, or 0.9 percent, to 86.64 cents a pound yesterday, the highest since May 2004, USDA data show. The meat remains a cheap alternative to
wholesale beef, which reached $1.5852 a pound yesterday, according to USDA data.
Processors slaughtered 1.656 million hogs this week, more than the 1.569 million in the same period a year ago, USDA data show.
Lighter Weights
Hogs sold in the Iowa-Southern Minnesota area in the week ending July 26 weighed 259.3 pounds on average, down from 261.7 pounds a year earlier, USDA data show. Corn, the main ingredient in animal feed, jumped to a record $7.9925 a bushel on June 27 and is up 78 percent from a year ago.
``Even though we're slaughtering a significant number of hogs more than last year, the weight factor somewhat mitigates the tonnage problem,'' Conti said.
High feed costs also are forcing producers to shrink their breeding herds, signaling reduced production in the months ahead. Sow slaughter through June totaled 914,998 head, more than the 849,656 a year earlier,
Lewis Langell, the officer in charge of livestock and grain market news for the USDA's Agricultural Marketing Service, said in an e-mail yesterday.
``Sow slaughter is up as liquidation takes place due to high grain prices,'' Langell, based in Nashville, Tennessee, said in the e-mail.
In another livestock market, cattle futures for October delivery rose 0.15 cent, or 0.1 percent, to $1.063 a pound in Chicago. Most-active contracts have risen 11 percent this year on improving U.S. beef exports.
Feeder-cattle futures for September delivery rose 1.675 cents, or 1.5 percent, to $1.15325 a pound.
To contact the reporter responsible for this story: Molly Seltzer in Chicago at
mseltzer3@bloomberg.net.
Last Updated: July 31, 2008 15:56 EDT
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