090214 Cattle Drop as Beef Prices Slide on Slack DemandFebruary 4, 2009
(Bloomberg) -- Cattle futures fell for the first time in three sessions as tumbling beef prices signaled meat demand is waning as the economy slumps. Hogs gained, erasing earlier losses.
Wholesale choice beef dropped for nine straight business days through yesterday, the longest slide since January 2007, U.S. Department of Agriculture data show. Consumers with less disposable income may cut back on beef purchases as the recession deepens, said Dennis Smith, a senior account executive at Archer Financial Services Inc. in Chicago.
"Demand is sluggish and is likely to remain that way through February, March and even through April," Smith said.
Cattle futures for April delivery declined 0.7 cent, or 0.8 percent, to 86.125 cents a pound on the Chicago Mercantile Exchange. The price dropped 1.1 percent last month, falling for a sixth straight month.
Feeder-cattle futures for March delivery fell 0.575 cent, or 0.6 percent, to 93.425 cents a pound. Yesterday, futures jumped the exchange's daily trading limit of 3 cents after the USDA said the U.S. cattle herd on Jan. 1 was the smallest for the date since at least 1971.
Wholesale choice beef gained 0.06 cent to $1.4159 a pound at midday, according to the USDA. The price has declined 7.4 percent since Jan. 20.
In another livestock market, hog futures gained on speculation that cash- market prices will rise tomorrow as the supply of animals shrinks, Smith said.
Hog futures for April settlement rose 0.475 cent, or 0.8 percent, to 62.15 cents a pound on the CME. The price earlier declined as much as 2.1 percent.
"The outlook is steady to better in cash hogs tomorrow, and it looks like futures got wind of that and selling dried up," Smith said. "Today, the USDA made a downward revision in yesterday's hog slaughter by 5,000, so it looks like we're getting into a period of tighter hog supplies."
U.S. meatpackers processed 853,000 hogs in the first two days of this week, down 0.6 percent from the same period last week, the USDA said. After markets closed, the agency lowered its estimate for yesterday's slaughter to 424,000 hogs from 429,000.
Wholesale pork fell 0.15 cent, or 0.3 percent, to 56.79 cents a pound yesterday, USDA data show. The price retreated for the fourth straight day.