Cattle Prices Rise on Signs of Falling Animal Supply; Hogs Drop

By Whitney McFerron

Oct. 31 (Bloomberg) -- Cattle rose for a fifth day, posting the biggest weekly gain since 2004, on speculation that the supply of fattened animals to U.S. slaughterhouses is shrinking. Hog futures fell to an 11-month low.

U.S. meatpackers will process 638,000 head of cattle this week through tomorrow, down 1.4 percent from the previous week and down 3.5 percent from the same week a year earlier, the Department of Agriculture said today. The country's feedlot herd on Oct. 1 was the smallest for that date since 2003, the USDA said earlier this month.

``Our numbers of fed cattle coming off the feedlots are going to be the tightest for the whole entire year here in the next 30 days,'' said Troy Vetterkind, owner of Vetterkind Cattle Brokerage in Chicago. ``It's just the lack of placements from the previous five or six months, because of higher corn.''

Cattle futures for December delivery advanced 1.25 cents, or 1.4 percent, to 92.7 cents a pound on the Chicago Mercantile Exchange. That gain for the week was 5.9 percent, the largest jump since November 2004. Still, futures are down 7.6 percent this month, the biggest monthly loss since March 2006.

Futures may reach 94 cents a pound for the December contract and 97 cents for the February contract in the next 30 days, Vetterkind said.

Feeder-cattle futures for January delivery rose for a third day, gaining 0.8 cent, or 0.8 percent, to 98.05 cents a pound. The price dropped 5.5 percent for October.

Smaller Feedlot Herd

The feedlot herd fell to 10.415 million head of cattle as of Oct. 1 from 10.967 million animals a year earlier, the USDA said on Oct. 17. Cattle producers lost money for the 16th straight month in September after corn prices jumped, reaching a record $7.9925 a bushel on June 27, according to Ron Plain, an economist at the University of Missouri in Columbia.

Wholesale choice beef fell 0.4 cent to $1.4221 a pound today, USDA data show. The price has declined 8.5 percent in October, the biggest monthly drop since June 2007.

In another livestock market, hog futures fell for a fourth day on speculation that the slumping global economy is curbing overseas demand for U.S. pork.

The price of wholesale pork fell for the fifth time in six sessions yesterday to the lowest since April 10, according to the USDA. The MSCI World Index of equities has lost 20 percent in October, the most in its 38-year history.

Exports `Dragging'

``Hog exports have been dragging,'' said Dick Quiter, an account executive at FuturesOne in Chicago. ``That's directly related to some of the influences of the outside markets and the economy in general. It's just uncertainty everywhere, and it's probably tight credit.''

Hog futures for December settlement fell 1.2 cents, or 2.1 percent, to 54.8 cents a pound in Chicago. Earlier, the price touched 54.7 cents, the lowest since Nov. 12, 2007. Hogs dropped 15 percent in October, the biggest monthly decline since July 2003.

Wholesale pork fell 0.2 cent, or 0.3 percent, to 62.17 cents a pound, the USDA said, dropping 16 percent this month.

U.S. pork exports fell for the third straight month in August to 377.1 million pounds, down 7.9 percent from the previous month, according to the most recent USDA data. The U.S. still sent 3.279 billion pounds of pork abroad in the eight months ended Aug. 31, up 69 percent from a year earlier.

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