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Lower Yen and Peso Expected to Pressure US Pork Exports Demand

6 December 2016, at 12:00am

US - [email protected] Marketing Services says the lower value of the Japanese yen and Mexican peso, compared to the US dollar, could influence the export demand needed to clear a heavy supply of pork being produced in North America, writes Bruce Cochrane.

Over the past couple of months the supply of slaughter hogs has been running very close to the total US slaughter capacity resulting in downward pressure on live hog markets.

Tyler Fulton, the Director of Risk Management with [email protected] Marketing Services, says the hope is that the competition will pick up as live hog supplies move down and we'll see some improvement but that recovery is contingent on good pork sales both domestically and into the export markets.

Tyler [email protected] Marketing Services:

I think generally speaking domestic consumers have shown a strong demand for pork but there is just this heavy supply that we need to clear from the market.

We either do that in the domestic market place or in export markets.

One of the of the other features that's happened over the course of the last three weeks or so is the Japanese yen and Mexican peso, the two top markets that represent more than 50 per cent of pork exports from the United States, their currencies have come under significant pressure against the US dollar.

That makes US pork more expensive and is probably having a negative impact on the volume of pork exports.

That's not a good scenario when we're trying to clear this really heavy supply of pork that the North American industry is producing right now.

To date we've not seen a real negative effect on wholesale pork prices yet but we could, especially if we start struggling to clear the market of inventory and we see it build up week over week.

Fulton says there's still a lot of pork coming down the pipe and improved live hog prices will be contingent on moving that large amount of pork into all channels.

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