Grains Oilseeds

[KastelCo]

http://www.bloomberg.com/apps/news?pid=20602013&sid=adIJ1pY.MhZs&refer=commodity_futures

I added some COW today (Cattle/Hog futures).


Cattle Surge on Improved Beef Demand, Shrinking Herd; Hogs Rise

By Molly Seltzer

June 20 (Bloomberg) -- Cattle rose to the highest since at least 1986 as U.S. beef prices surged and high corn costs prolong losses for feedlots, encouraging some producers to shrink their herds. Hogs also rose.

Wholesale beef prices are the highest in 13 months, and domestic shipments of select and choice cuts yesterday totaled 14.94 million pounds, the most since Jan. 24, U.S. Department of Agriculture data show. The USDA probably will report today that feedlots cut their purchases of young cattle for a third month in May, according to 11 analysts surveyed by Bloomberg.

``When grain prices are this high, the cattle should be staying out in the pasture,'' said Mark Schultz, a vice president at Northstar Commodity Investments LLC in Minneapolis, Minnesota. Livestock producers will ``try to keep them in the pasture longer, to feed them less corn,'' he said.

Cattle futures for August delivery rose 1.4 cents, or 1.4 percent, to $1.0485 a pound on the Chicago Mercantile Exchange, after earlier reaching $1.0615, the highest for a most-active contract since at least April 1986.

The price of cattle has jumped 19 percent since the end of March as corn surged to a record and feedlots began to reduce the size of their herds to curb losses. Corn futures traded on the Chicago Board of Trade are up 86 percent in the past year.

Feedlots buy year-old animals that weigh 500 to 800 pounds and fatten them on corn for about four to six months, until they weigh about 1,200 pounds (544 kilograms) and are sold to slaughterhouses.

Feedlot Losses

Commercial feedlots from Nebraska to Texas lost an average of $48.47 on each steer or heifer sold for slaughter in May, compared with a loss of $137.66 in April and a record $169.80 in March, said Erica Rosa, an economist at the Livestock Marketing Information Center in Lakewood, Colorado.

U.S. processors including Tyson Foods Inc. and National Beef Packing Co. slaughtered 128,000 cattle yesterday, up 0.8 percent from a week earlier, the USDA said yesterday.

Wholesale beef prices rose 0.74 cent, or 0.5 percent, to $1.5912 a pound today, up 11 percent from a year earlier, the USDA said.

``The packers made a real effort to get a lot of beef sold, which they did,'' said Walt Hackney, owner of Omaha, Nebraska- based Hackney Ag.

Feeder-cattle futures for August delivery rose 2.475 cents, or 2.2 percent, to $1.13575 a pound in Chicago.

Hogs Rally

In another livestock market, hog futures jumped by the CME's daily limit on signs of improved pork demand and expectations that U.S. livestock producers will reduce the size of their herds.

Rising corn costs led to a loss in the hog-producing unit of Smithfield Foods Inc., the largest U.S. pork producer, in the three months ended April 27. The company said Feb. 19 it would reduce its breeding herd by as much as 5 percent. Wholesale pork prices are up 44 percent since the end of March.

``Even with prices going higher today, you still cannot make money buying corn and meal in the open market and selling pigs,'' Schultz said. ``It still does not turn a profit.''

Hog futures for August settlement rose 2.925 cents, or 3.9 percent, to 78.375 cents a pound, after earlier rising by the CME's daily limit of 3 cents. The price has gained 35 percent this year on signs of improved demand for U.S. pork.

Wholesale-pork prices rose 1.7 cents, or 2.2 percent, to 79.33 cents a pound yesterday, the highest this month, USDA data show.

To contact the reporter responsible for this story: Molly Seltzer in Chicago at [e-mail]
Last Updated: June 20, 2008 14:50 EDT