By Bruce Cochrane.
The Director of Risk Management with h@ms Marketing Services says export demand will play a key role in offsetting higher than expected October November U.S. slaughter numbers.
USDA released its Quarterly Hogs and Pigs Report last week.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says numbers were pretty much on line with expectations with the exception of the pig crop number, which represents hogs to be slaughtered in the October November time frame, which was 1 to 1.5 percent higher than anticipated resulting in a negative market reaction for that time frame.
Tyler Fulton-h@ms Marketing Services:
Demand is really playing a critical role to offset some of this negative supply related news.
There's been a lot of talk about China in the summer's market believing that maybe they might buy significantly larger quantities than what they have in the last couple of years.
That's largely because they're short of pork in China right now and prices are quite lucrative to move North American pork into that market but it doesn't always work cleanly.
North America actually does not have a significant market share in that county.
In fact Europe does and so Europe is probably better positioned to take advantage of the current economics in China.
That said, I think there's generally an expectation that we can expect to see significant improvement in exports to China but there is still some question as to whether or not those increases to China will result in a net export increase in volume because we're seeing a bit of weakness in Japan and Mexico, pretty much the two largest markets for U.S. pork.
Fulton says what's at play now is whether or not the increase in China is going to be enough to offset the increase in supply anticipated in the fourth quarter.
Source: Farmscape