090132 Hogs Drop as U.S. Pork Sales to China May Shrink

(Bloomberg) -- Hog prices fell for a fourth straight day on speculation that China may cut back on imports of U.S. pork this year. Cattle futures gained.

China, the world's largest consumer of pork, may limit imports to help support domestic hog prices, according to a government statement yesterday. The country may import 25 percent less of the meat in 2009 than last year, analysts for the U.S. Department of Agriculture have estimated.

China "said they're going to adjust imports and exports, because the easiest way to support domestic prices is to not have much competition," said Lawrence Kane, a market adviser at Stewart-Peterson Group in Elmwood, Illinois. "Part of the issue scaring the hog market is what's happening to Chinese demand."

Hog futures for April settlement fell 0.85 cent, or 1.3 percent, to 65.85 cents a pound on the Chicago Mercantile Exchange.

China, including Hong Kong, was the second-largest U.S. pork buyer in the 11 months ended Nov. 30, more than doubling imports to 825.7 million pounds from a year earlier, USDA data show. Japan is the biggest importer of U.S. pork.

China may import 360,000 metric tons (793.7 million pounds) of pork in 2009, down from an estimated 480,000 tons in 2008, the Foreign Agriculture Service of the USDA said last week.

U.S. suppliers shipped 344.7 million pounds of pork abroad in November, down 12 percent from October, the USDA said yesterday. Shipments to China, including Hong Kong, tumbled 57 percent to 25.8 million pounds in November from a year earlier.

Wholesale pork dropped for a fourth straight business day yesterday, declining 1.64 cents, or 2.8 percent, to 56.21 cents a pound, USDA data show. The price was the lowest since Jan. 5.

Cattle Gain

Cattle futures rose for the second time in three days as higher wholesale beef prices signaled demand for the meat may be improving.

Wholesale choice beef rose 0.82 cent, or 0.5 percent, to $1.5072 a pound at midday, the highest since Dec. 2. The price gained 4.8 percent in the past week.

"With the slowing economy, what's happened is the packer and the retailer and the wholesaler are all working hand to mouth," said Don Roose, president of U.S. Commodities Inc. in West Des Moines, Iowa. "So when demand picks up a little bit even, they're in a scramble."

Cattle futures for April delivery rose 0.475 cent, or 0.5 percent, to 87.3 cents a pound in Chicago. The most-active contract is up 1.5 percent this month.

Feeder-cattle futures for March delivery declined 0.325 cent, or 0.3 percent, to 94.3 cents a pound.

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