By Bruce Cochrane.
H@ms Marketing Services says the balance between U.S. hog slaughter numbers and U.S. slaughter capacity will be among the key factors influencing live hog prices heading into the fall and winter.
Increasing supplies as the result of improved growth rates due to cooler weather and new crop corn coming off the fields combined with typically higher hog numbers at this time of year and higher supplies of competing meats like beef, chicken and turkey have trigged the normal seasonal decline in North American live hog prices.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says U.S. slaughter capacity will likely be the biggest factor influencing markets over the next three to four months.
Tyler Fulton-h@ms Marketing Services:
Right now it's no problem.
The hog slaughter is coming in just under 2.3 million hogs in the United States per week and it's generally thought that slaughter capacity is something close to 2.5 million hogs.
We're well under that level right now but we expect that, if we continue on the growth trend that we've seen of about two and a half percent more pigs over year ago levels that we could see some weeks bump up against that hard cap of 2.5 million.
I don't expect that it's going to have massive price implications because I don't see it being a continual thing.
But the week, for example following the U.S. Thanksgiving, which would be the first week of December, may spell the lowest cash price and that's in large part due to that heavy supply that we anticipate at that time.
Fulton says two new slaughter plants due to come on line in the U.S. next year will be a definite requirement to avoid capacity constraints into 2017.
He says the new capacity won't have much impact on production this fall or winter but, as hog numbers ease next spring, we'll see increased competition which will help both U.S. and Canadian producers.
Source: Farmscape