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Prospects of New Trade and Tax Policy Pressures Hog Markets

01 March 2017
Manitoba Pork Council

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CANADA - The Director of Risk Management with h@ms Marketing Services blames uncertainty over trade for this week's dramatic drop in lean hog futures.

This week has seen considerable volatility within the hog market.

Tyler Fulton, the Director of Risk Management with h@ms Marketing Services observes lean hog futures have dropped significantly, rooted largely in a cash market influence from the pork belly complex.

Tyler Fulton-h@ms Marketing Services:

Pork bellies are the primal cut that is the source for bacon and we were bumping up against near record high prices over the course of the past month or so and there really wasn't a lot of support for it, keeping in mind that pork production numbers and weights have all been significantly up from year ago levels.

So the flow of pork was still flowing quite heavy but there was some speculation in the market that there was a tight supply and quite simply the market couldn't sustain the levels that the pork bellies were trading at.

They were trading at approximately 180 to 185 dollars per hundredweight.

On Wednesday's trade alone they dropped 25 dollars per hundredweight which accounts for about a 12 to 13 percent drop, which is very significant for any one primal cut to make a move in one day.

That really shook the whole hog market and resulted in some significant selling and weakness in both the cash and futures markets.

Fulton says domestic demand for pork is quite good but the question is whether that demand can be sustained where as, on the export side the uncertainty comes from the possibility of new trade and tax policy that could result in a de facto trade war with, for example, Mexico which would be negative for livestock markets, particularly the lean hog market.

ThePigSite News Desk

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