Higher US Hog Numbers Expected to Result in Lower Market Prices

CANADA & US - The Director of Risk Management with [email protected] Marketing Services says a dramatic increase in US hog numbers will signal a shift to lower market hog prices, Bruce Cochrane reports.
calendar icon 19 July 2017
clock icon 3 minute read

The USDA's Hogs and Pigs Report for the second quarter of 2017 showed an increase in both the US breeding herd and market hog numbers.

Tyler Fulton, the Director of Risk Management with [email protected] Marketing Services, expects this week to signal a turning point from what was a sharply higher market over the past month to softer prices.

Tyler [email protected] Marketing Services

The report pretty much confirmed the idea that market hog numbers were going to increase by roughly four per cent over the course of next four months or so and that was pretty much in line with what expectations were.

That four per cent increase, that's very large so that explains the big discount that the lean hog futures are trading at from the current cash market.

On the breeding herd side it really just confirmed the belief of the industry in that they anticipated that the herd would grow about one and a half per cent and that's pretty much what the USDA pegged it at.

To put it in perspective the average market hog growth on an annual basis was probably about one and a half percent over the last 10 years so this four percent is greater than double what the typical growth is so that's sizable.

It's a decisive move to larger numbers.

It does have consequences directly to Canadian producers because our prices are a function of that US market and consequently we're going to be moving into a time frame of lower prices just by virtue of the abundant supplies that are available across North America.

Mr Fulton says the market isn't likely to collapse but Canada is at a tipping where the hog numbers are heavy enough where the packers will start to pull back some of their cash bids.

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