Cattle Rise as Falling Dollar May Spur Beef Exports; Hogs Drop

By Whitney McFerron

Oct. 29 (Bloomberg) -- Cattle futures rose the most in 19 months as the dollar fell the most since 1998, making U.S. beef cheaper for buyers using other currencies. Hogs declined.

U.S. beef exports dropped for four straight weeks through Oct. 16, and the U.S. Dollar Index, which values the currency against six major counterparts, gained more than 9 percent in the past month through yesterday. The gauge slumped as much as 2.9 percent today and the South Korean won rebounded from a 10- year low yesterday. South Korea is the sixth-largest U.S. beef importer.

``If the dollar backs off some, that would be helpful,'' said David Kruse, a commodity trading adviser at Commstock Investments Inc. in Royal, Iowa. ``We just got the beef market back open to Korea, and suddenly the Korean money isn't worth anything anymore, and our exports have been hurt.''

Cattle futures for December delivery rose for a third day, gaining 2.125 cents, or 2.4 percent, to 91 cents a pound on the Chicago Mercantile Exchange. That's the biggest jump for a most-active contract since March 8, 2007. The price has dropped 9.3 percent this month.

Feeder-cattle futures for January delivery rose 1.8 cents, or 1.9 percent, to 95.9 cents a pound in Chicago. On Oct. 27, the price touched 92.6 cents, the lowest for a most-active contract since Jan. 24, 2007. Futures have declined 7.5 percent this month.

Mad Cow Restrictions

Countries including South Korea halted imports of U.S. beef after the U.S. discovered its first case of mad cow disease in December 2003. South Korea later permitted some imports, with restrictions. Before 2003, the country was the third-biggest buyer of the meat.

U.S. exporters sold 3,399 metric tons of beef in the week ended Oct. 16, down 7.9 percent from the previous week and 74 percent below the week ended Sept. 18, according to the Department of Agriculture.

The South Korean won appreciated 2.9 percent to 1,427 per dollar at the 3 p.m. close in Seoul, according to Seoul Money Brokerage Services Ltd.

Wholesale choice beef fell 0.75 cent, or 0.5 percent, to $1.422 a pound today, according to USDA data. The price is down 8.5 percent this month.

Cattle also gained as corn futures jumped the 30-cent limit on the CME on speculation that the Federal Reserve would reduce U.S. interest rates, reviving demand for food and animal feed. The Fed this afternoon cut its benchmark interest rate by half a percentage point to 1 percent, matching a half-century low.

Lower Weights

Higher corn prices may spur producers to feed cattle less, reducing animal weights and the overall supply of beef.

``They'll feed cattle for a shorter time maybe or feed fewer of them if corn is going up,'' said Joe Kropf, an analyst at Joe Kropf & Sid Love Consulting Services Inc. in Overland Park, Kansas.

Hog futures for December settlement fell 0.475 cent, or 0.8 percent, to 57.575 cents a pound in Chicago. The most- active contract has declined 10 percent this month.

Wholesale pork advanced 0.11 cent, or 0.2 percent, to 65.17 cents a pound yesterday, the USDA said. Pork has dropped 12 percent this month.

To contact the reporter on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net.