Live Hog Prices Pressured by High US Slaughter

CANADA - The Saskatchewan Ministry of Agriculture reports continued high U.S. hog slaughter numbers and abundant supplies of meat in cold storage are keeping a lid on live hog prices, writes Bruce Cochrane.
calendar icon 9 July 2008
clock icon 3 minute read

North American live hog prices have declined by about 10 dollars per 100 kilograms, or about five to seven percent, over the past month.

Livestock economist Brad Marceniuk observes, while Canadian production has declined, we've continued to see high U.S. hog slaughter numbers and large supplies of pork in cold storage and that has kept hog prices from the big increases we typically see during the summer.

Brad Marceniuk-Saskatchewan Ministry of Agriculture

In Canada hog production continues to decline as sow liquidation increases.

In the United States, based on the June quarterly hogs and pigs report, U.S. hog market inventories are actually up about 6.5 percent from June of last year while their breeding herd numbers are down only about one percent from last summer.

So the report was very negative leading many economists to estimate that fourth quarter U.S. hog slaughter numbers could be over 31 million head which really could test slaughter capacity and be negative for fourth quarter prices.

Canadian producers continue to lose significant amounts of money.

Feed costs have been the main reason.

While prices are a little bit below long term averages, feed costs have increased significantly over the last year and they're up about 40 percent from the same period a year ago.

United States hog producers are in a similar position, losing significant amounts of money.

Corn prices in the United States have and continue to increase which has really increased their feed costs also.

Marceniuk notes pork stocks declined in May from April but are still about 15 percent higher than year ago levels while meat stocks overall, also declined in May but are up about 18 percent from year earlier levels.

He says, while demand has kept prices relatively stable, fourth quarter U.S. hog slaughter numbers are expected to reach 31 million head which could test slaughter capacity and put further pressure prices.

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