Oct. 25 (Bloomberg) -- Hog futures rose to a seven-week high on signs that U.S. producers are holding animals on farms longer because of lower feed costs, tightening supplies available to pork processors. Cattle advanced.
The average weight of hogs at slaughter yesterday was 2.1 percent heavier than a year earlier and 3.1 percent more than at the end of July, government data show. A three-year low in the price of corn, the main feed ingredient, is encouraging farmers to fatten hogs longer before they are sold to pork plants, said Don Roose, the president of U.S. Commodities Inc.
“Guys are adding on pounds because it’s profitable,” Roose said in a telephone interview from Des Moines, Iowa.
Hog futures for December settlement rose 0.9 percent to close at 90.425 cents a pound at 1 p.m. on the Chicago Mercantile Exchange, after touching 90.65 cents, the highest for the most-active contract since Sept. 6. Prices rallied 2.8 percent this week and are up 16 percent from a year ago.
Pork processors slaughtered 1.724 million hogs this week through yesterday, down 0.5 percent from a week earlier, U.S. Department of Agriculture data show.
Cattle futures for December delivery increased 0.1 percent to $1.32975 a pound on the CME, after touching $1.347, the highest for a most-active contract since Jan. 15. Prices rose 0.7 percent this week, the biggest gain this month.
Cattle futures for October delivery, the closest to expiration, rose as much as 1.6 percent to $1.349, the highest ever for a front-month contract, before closing down 0.2 percent at $1.3255. Open interest, a measure of contracts that have not been closed or liquidated, reached 1,877 for the October futures, or 1.3 percent of the 149,232 held for December delivery.
Feeder-cattle futures for January settlement fell 0.4 percent to $1.6605 a pound, the third straight decline.
--Editors: Steve Stroth, Thomas Galatola