Chicago - Hog futures prices fell on the Chicago Mercantile Exchange as anxious traders liquidated their holdings in advance of the release of a government count of the nation's swine herds.
The U.S. Department of Agriculture report, released after the close of trading, said the nation's hog inventory as of Dec. 1 was 1.6 percent higher than the same time a year ago. While the report highlighted an oversupply that has depressed pork prices, it also said farmers plan to breed fewer hogs in the next six months.
On other markets, cattle futures were mixed as were grain futures prices, and soybean futures prices were higher.
According to the USDA, there are 62.156 million head of hogs on the nation's farms, compared to 61.158 million a year ago. The agency also places the number pigs born in the final quarter of 1998 at 25.878 million head, up 2 percent from last year. It takes six months from the time a pig is born to the time it is usually ready for marketing.
“The figures do not offer a whole lot of hope (for prices) in the short term,” said analyst Dan Vaught of A.G. Edwards & Sons.
Pork producers have been struggling with an oversupply of hogs, which has caused pork prices to drop to less than $10 per hundredweight in some areas of the country, down from $46.50 just a year ago.
Hog farmers had built up their herds in the expectation that demand would continue to increase. However, an economic downturn, particularly in Asia, has reduced pork consumption, putting many farmers in danger of going out of business.
However, Vaught points out the USDA report indicates the number of sows being bred in the next quarter will decline 1 percent and in the following quarter it will decline 7 percent.
“The industry is liquidating the herd,” he said, adding the figures indicate inventories may be tight by this time next year.
December cattle were .20 cent higher at 61.10 cents a pound; January feeder cattle were .57 cent lower at 69.10 cents a pound; February hogs were .10 cent lower at 32.30 cents a pound; February pork bellies were .93 cent lower at 44.17 cents a pound.
Meat Industry Insights News Service
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Phone: 631-757-4010
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