US pig collapse knocks-on to cattle

By Joanna Newman

CATTLE prices continue to come under pressure in the USA because of the astounding collapse in the hog market to depression-era levels.

Traditionally beef and pork prices tend to track each other in their competition for the US protein dollar.

However, a cold spell and forecast of more wintry weather have helped stem the decline in the past couple of days. After weeks of unseasonably warm weather, the drop in temperatures will slow the rate of weight gain in the US beef herd.

Cold weather will also push up the cost of grain as producers step up the rations for store cattle in the feedlots.

The colder weather drove up the Chicago February live cattle futures contract on Thursday, 17 December to 58.97¢/lb (77.3p/kg), compared with around 57.5¢/lb earlier in the week.

However, the low hog prices mean that cattle still have a long way to go to recover to their level of over 63¢/lb at the start of the month.

At these levels producers are losing $60/head (£36/head), according to some analysts.

Given the poor market, producers have held back marketing their animals in the hope of a price recovery, with the result that slaughter rates have dropped while average weights are up.