By Bruce Cochrane.
The Director of Risk Management with h@ms marketing services reports higher than anticipated live hog numbers have resulted in a counter-seasonal decline in live hog prices.
North American live hog prices have been on the decline over the past month.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services observes we've seen a counter-seasonal move in cash hog prices, fueled by high than expected slaughter numbers.
Tyler Fulton-h@ms Marketing Services:
It doesn't bode particularly well given that this is typically the strongest time frame of the year.
So what's happened I think is the hog numbers have exceeded expectations a little bit and packers have been preparing to build in larger margins in advance of what typically is the start of the decline usually into August.
Mid-August is usually when we start to see an increase in hog numbers which coincides with a downturn in prices but we are a full month ahead of schedule it seems on that, more than that actually and that could be because hog numbers are up compared to what was anticipated and export sales on the demand side, while they are relatively strong, they really didn't do as well as what some analysts were expecting and so in general the cash price trend has been lower.
Fulton says right now packers appear hesitant to pay up to buy more hogs than they typically would.
He suggests there isn't a strong rationale for that because estimated packer margins, the difference between what they're selling wholesale pork for and what they're buying those hogs for are about as good as they've been for this time of year and we're nowhere near the physical limitations on the number of hogs they can actually put through those facilities.
Source: Farmscape