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Tight US Slaughter Capacity Expected to Pressure Nov-Dec Live Hog Prices

28 July 2016, at 12:00am

US - The Director of Risk Management with [email protected] marketing services anticipates lower live hog prices come November December as US slaughter hog numbers approach processing capacity, writes Bruce Cochrane.

North American live hog prices have been on a counter seasonal decline over the past month, more than a month earlier than the typical seasonal slide fueled primarily by higher than anticipated US slaughter numbers.

Tyler Fulton, the Director of Risk Management with [email protected] Marketing Services, says, despite the availability of slaughter capacity right now, packers appear to be preparing for fall when available space will tighten and they're reluctant to pay higher prices.

Tyler [email protected] Marketing Services:

As far as slaughter capacity going forward, what could be the time frame that we might see some constraints is late November early December, right around the US Thanksgiving period.

That's when we anticipate seeing a hog slaughter in the US of more than 2,.4 million, possibly bumping up to 2.5 million.

In the event that we see that, that's getting very close to the ability for the US industry to actually slaughter all of the hogs.

In the event that that constraint was met, cash prices would turn lower very quickly but, in general, I think there's an expectation that we'll be able to just squeak through this fall time without running into big constraints and then, by this time next year, we expect to see some other facilities in the US come on stream and ease some of that slaughter capacity constraint.

Mr Fulton predicts continuing declines in live hog prices moving toward the November December time frame.

He says, given the anticipated burdensome supply of slaughter hogs, those declines could be even steeper than we would typically see.

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