A US$3 jump in some cash hog prices Dec. 31 helped U. S. hog futures close higher for the day and for the year at the Chicago Mercantile Exchange, while cattle limped to a year-end finish amid worries sluggish economies here and overseas will hurt demand for beef in 2009.
Hog futures were up 6.3 per cent for the year and up about two per cent for the day, while live cattle futures finished 2008 down 10 per cent for the year and down 1.7 per cent for the day.
Activity in the Chicago cattle and hog markets was light Dec. 31 as traders spent much of the session balancing accounts for yearend bookkeeping.
A mild burst of buying developed in hogs near midday Dec. 31 when a U. S. Department of Agriculture livestock report showed Iowa and Minnesota hogs traded $3 per hundredweight higher that morning at $52.63/cwt (all figures US$).
That news had traders putting aside, at least temporarily, worries about weak economies and ample hog supplies.
There were mixed reactions to a USDA hog supply report released Dec. 30 and by late Dec. 31, the report appeared to have little impact on the futures.
Analysts still believe there will be plenty of hogs in early 2009, which could keep a lid on cash and futures prices, particularly if global economies remain weak.
USDA on Dec. 30 reported the U. S. hog herd as of Dec. 1 at 98 per cent of a year ago, or 66.708 million head, the breeding herd at 98 per cent, or 6.081 million, and the market hog supply at 98 per cent, at 60.627 million.
The total herd and market hog numbers were slightly less than expected and the breeding herd was slightly more than expected.
While the market hog supply was down from a year ago, weight data in the report showed the number of hogs due to hit the market in the next month to be unchanged from a year ago. That supply could cap hog prices early in 2009, traders said.
Cattle futures finished 2008 uneventfully, with the more actively traded February finishing higher on the day due to some last-minute February/April spreading. Cash cattle markets were quiet and cash beef prices lacked direction.
“I don’t know why we are lower, we don’t have the Mexico excuse anymore,” one trader said near midday Dec. 31, when the market was down.
U. S. cattle and hog futures sped lower the previous week when it was learned that Mexico had banned meat from 30 U. S. meat plants. Since then, nearly all of the bans have been lifted.
Recent government reports indicate there will be fewer cattle in early 2009. While that would normally be supportive to prices, the recessionary economies here and overseas have had traders worried demand for beef could suffer.