Meats

LAKE CHARLES, LA (KPLC) -

The nation's cattle herd count has shrunk to its smallest size since the 1950s. That's according to the National Agricultural Statistics Service (NASS).

By Elizabeth Campbell - Feb 4, 2013

Cattle futures rose for the first time in a week after a government report showed the size of the U.S. herd fell to 61-year low, signaling tightening beef supplies. Hog prices dropped.

Hog prices fell the most in two weeks on signs of increasing U.S. supplies of pork. Cattle futures also slid.

Warehouses held 554.4 million pounds (about 251,000 metric tons) of pork at the end of December, up 14 percent from a year earlier, the U.S. Department of Agriculture said yesterday in a report released after the close of trading. Chicken-meat inventories were 7.9 percent larger than a year earlier, and beef supplies rose 1.8 percent, USDA data show.

“The cold storage not only was a little bit heavy on the pork, poultry came in higher and so did beef,” Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “We came in a little bit heavier than what the trade was expecting.”

Cattle futures climbed for the first time in more than a week on signs of tightening beef supplies. Hog prices were little changed.

Japan will allow imports of U.S. beef from cattle up to 30- months old, up from 20 months, as early as Feb. 1, Health Minister Norihisa Tamura told reporters in Tokyo today. The Food Safety Commission recommended the change in October, saying it wouldn’t increase health risks. Cargill Inc. said last week that it will idle a beef-processing plant because of shrinking supplies of animals.

There’s been a “double confirmation of tight beef supplies,” Dennis Smith, an analyst at Archer Financial Services in Chicago, said in a telephone interview. “We had confirmation from Cargill last week,” he said, followed by Japan’s move, acknowledging “how tight beef supplies are going to get this year.”

Cattle prices fell on signs of slack demand for beef. Hog futures also declined.

Wholesale beef fell yesterday to a three-week low, and meatpackers processed 256,000 cattle in the first two days of this week, down 0.4 percent from a year earlier, U.S. Department of Agriculture data show. Processors are losing $45 a head, Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview.

“Demand is still weak,” Dick Quiter, an account executive at McFarland Commodities LLC in Chicago, said in a telephone interview. “It’s kind of a snowballing situation. Cattle numbers are down, but demand is down proportionally, and packers are losing money. That adds up to a lower market.”

Cattle futures fell to the lowest in four weeks on speculation that U.S. supplies are outpacing demand. Hog prices also declined.

Meatpackers processed 501,000 cattle in the first four days of this week, up 48 percent from the previous week, U.S. Department of Agriculture data show. Wholesale beef headed for the first weekly decline since Dec. 21.

“We’re backing cattle up a bit this week off of some increased numbers and perceived weakness in the cash market,” Dennis Smith, an analyst at Archer Financial Services in Chicago, said in a telephone interview.

Cattle futures rose the most in two weeks on speculation that U.S. animal supplies are shrinking as demand for beef climbs. Hog prices also increased.

Steers averaged $1.27 a pound in the first two days of this week, up 1.9 percent from a week earlier, U.S. data show. Meatpackers are buying animals for the first full week of the new year for slaughter, supporting prices, Troy Vetterkind, the owner of Vetterkind Cattle Brokerage LLC in Chicago, said in a report. Yesterday, 127,000 cattle were processed, up 5 percent from a week earlier.

Cattle futures rose for the second time in three sessions after U.S. legislators passed a budget deal to avert automatic tax increases and spending cuts, buoying the outlook for meat demand. Hog prices were little changed.

The Standard & Poor’s GSCI Spot Index of 24 commodities climbed as much as 1.6 percent after the House of Representatives approved a bill to avert the so-called fiscal cliff and prevent income taxes from rising for most U.S. workers. President Barack Obama said he will sign the bill that makes the George W. Bush-era income-tax cuts permanent for Americans while letting them expire for top earners.