090213 Hogs Fall on Signs of Shrinking U.S. Pork Demand

(Bloomberg) -- Hog futures fell for the second time in three days on speculation that meatpackers won't pay more for the animals as shrinking pork demand curbs profits. Cattle prices were little changed.

The price of wholesale pork has dropped 2 percent in the past week, while cash-market hogs gained 2.7 percent, cutting meatpacker margins. Cash prices rose on signs the animal supply is shrinking. Demand for pork may dwindle as the global recession deepens, said Christian Mayer, a market adviser at Northstar Commodity Investments LLC in Minneapolis.

"It's unprofitable for packers now, so they're not going to be bidding up," Mayer said. "I haven't heard any exciting export news in a while. It's a few days before we get the monthly export report, but with the economies around the world, I can't imagine we'll be too positively surprised."

Hog futures for April settlement fell 0.95 cent, or 1.5 percent, to 61.2 cents a pound at 10:07 a.m. on the Chicago Mercantile Exchange. Last week, the price dropped 2.2 percent, the second straight decline.

Meatpackers processed 9.86 million cattle last month, down 11 percent from a year earlier, according to USDA estimates. The price of cash-market hogs climbed 16 percent in January.

The price of wholesale pork rose 0.21 cent, or 0.4 percent, to 57 cents a pound yesterday, the first gain in five days, USDA data show.

Cattle futures for April delivery rose 0.075 cent to 86.2 cents a pound. The price dropped 0.8 percent yesterday.

Feeder-cattle futures for March delivery rose 0.05 cent to 93.475 cents a pound.

Yesterday, wholesale choice beef dropped for the 10th straight day, the longest slide since July 2006. The price fell 0.41 cent, or 0.3 percent, to $1.4112 a pound, the lowest since April 9.

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