US Pork Month's Benefit To Hog Futures Unclear

by 5m Editor
13 October 2004, at 12:00am

US - Almost halfway through October Pork Month, it is unclear whether the homage to pig meat actually yields tangible benefits for the Oct futures contract during the period or offers a September surprise.

Although its exact date of origin could not be traced, National Pork Board spokeswoman Cindy Cunningham said October Pork Month has been in existence for more than 30 years. It comes at a time of year when most hogs come to market, thus creating the need for promotions for pork, she said.

Pork Month has evolved to where NPB works with retailers and the food service sector to feature pork prominently throughout the fall, Cunningham said.

Indeed, hog supplies historically increase during the fall, which tends to weigh on live hog prices and ultimately futures. Those declines this year have been somewhat mitigated by pork's continued strong domestic and export demand through October, which was attributed to food safety and animal health issues, according to industry sources.

Dan Vaught, analyst with A.G. Edwards & Sons in St. Louis, said the purpose of pork month is to stimulate pork demand and cushion cash hog and futures prices, but it is debatable whether it affects October pork futures.

Vaught said 60% to 70% of the pork product bought by retailers for Pork Month featuring is actually purchased in September when the industry typically experiences relatively strong cash and futures prices. This would lend some credence to speculation that pork month stimulates demand to a certain extent, he said.

Steve Meyer, president of Paragon Economics Inc. in Adel, Iowa, said the National Pork Board and state organizations have conducted Pork Month for such a long time that there is no available data on what would happen if it no longer existed. But with Oct futures expiring around the middle of the month, Pork Month's effect would be limited, he said.

Weekly slaughters tend to increase in November and December, which makes putting pork in the forefront during October a good idea, and it may offer some support to Dec futures in November, said Meyer.

This year's pork demand situation may not change Pork Month's role much, said Meyer. However, the entire industry is in a "protect-the-demand-gains" mode and any benefits from Pork Month should help in that effort, he said.

Source: eFeedLink - 13th October 2004

Take me to eFeedLink

5m Editor