Declining Live Hog Prices Buck Seasonal Trends

by 5m Editor
9 May 2012, at 7:51am

CANADA - The Manager of Industry and Policy Analysis with the Saskatchewan Pork Development Board blames increased US pork production and a decline in the value of pork for lower live hog prices this spring, according to Bruce Cochrane.

In most years live hog prices rally in March, April and May as growth rates slow due to warmer temperatures approaching summer and demand for pork increases due to barbecue season.

Mark Ferguson, the Manager of Industry and Policy Analysis with Sask Pork, observes hog prices have been in a holding pattern since last November averaging about 155 dollars per hundred kilograms before falling to an average of 147 dollars last month.

Mark Ferguson-Saskatchewan Pork Development Board

Canadian hog prices are based on United States markets and we basically have a formula that determines it and the exchange rate is in there.

This time it's not the exchange rate that's the problem, it's been relatively stable around par.

The problem is that US lean hog futures markets and cash markets have been declining since February and cash prices as a result have been declining since the beginning of April.

The main reason seems to be just a general decline in pork meat prices.

The US carcass cut-out which measures the wholesale value of meat, it's been in decline and it's actually 17 percent lower than what it was a year ago so meat prices are probably the main reason.

Another reason could be that US pork production is actually up 3.6 per cent from last year and the stocks of pork in cold storage as of 31 March, they're also up 6.7 per cent so there's just an increased supply of pork out there and that's definitely contributing to some lower pricing.

There's also rumors there's a bit of a slow-down in US pork exports right now to countries such as China.

Mr Ferguson notes there were some great opportunities to lock in solid prices for most contract months up until about March of this year so hopefully producers were able to take advantage of those opportunities and don't have to ride the cash market right now.