Traders sent CME Group cattle and hog futures prices lower today even after government data showed the U.S. slashed inventories of beef, pork and chicken over the past year.

Weakness in the cash market and anticipation pork product prices are heading for a seasonal decline overshadowed bullish meat inventory figures, said Jim Burns, an independent hog trader at the CME. “We’re expecting a turn (lower) in the product market” before Easter ham season, Burns said.

Lean hog futures for April delivery fell 0.7 cent to 69.6 cents a pound on the CME.

On Midwest cash markets this morning, hog carcass prices ranged from $63.95 to $65.39 per hundredweight, down 19 cents to 89 cents from Monday, according to USDA Agriculture reports.

The USDA’s monthly Cold Storage report, released Monday, underscored the widespread contraction across the livestock industry. Beef and pork producers have trimmed herds to stem losses as the weak economy hurt meat demand, particularly for restaurants.

Nationwide frozen pork inventories at the end of January totaled 495.6 million pounds, down 18 percent from a year earlier, the USDA said. Ham and belly supplies dropped 15 percent and 23 percent, respectively, according to the USDA.

Pork supplies are about 8 percent below average for the past five years, industry analysts Steve Meyer and Len Steiner said in CME’s Daily Livestock Report.

While pork inventories usually peak between January and April, “this year could be very different primarily because the normal August bottom for pork inventories never happened in 2009,” Meyer and Steiner wrote. “Pork stocks kept going down through the end of December in spite of seasonally higher slaughter and production.”

The inventory figures indicate a “very current” meat and poultry complex, meaning an improvement in demand could drive prices up quickly, Meyer and Steiner said.

“Demand is still the key issue,” the analysts said. While the U.S. economy is recovering by some indications, “it doesn’t appear that consumers are parting with many ‘elective’ dollars… yet. We think they will, and a meal or two away from home may be an early splurge,” Meyer and Steiner said.

In CME futures trading today, the April lean hog contract’s failure to push above recent highs encouraged selling, said Burns. April rose as high as 70.9 cents a pound today, near a nine-month high of 71.15 cents reached Jan. 21.

April hog futures may have further downside, Burns said, and may test support around the 100-day moving average of about 68.3 cents.