Increased Pork Demand Key to Offsetting Effects of Higher Hog Slaughter

By Bruce Cochrane

The director of risk management with h@ms Marketing Services says the we'll need to see an increase in the global demand for pork in order to reverse a recent downward trend in live hog prices.

A dramatic slide in North American live hog prices over the past month is being blamed primarily on an increase in U.S. hog slaughter numbers.

Tyler Fulton, the director of risk management with h@ms Marketing Services, says the biggest factor affecting live hog prices has been the supply situation, the result of increased pork production but also pressure from increasing supplies of poultry and beef.

Tyler Fulton-h@ms Marketing Services:
On the demand side, that is where I start to consider things like the economy and competing meats.

Obviously the U.S. economy is performing significantly better than it has in recent years.

When you factor in the competing meats influence on the demand equation for pork, they kind of cross each other off.
They offset each other.

And so I think really where any divergence from trend line demand might come from is from export markets.

That's where we would hope to see some significant gains in order to kind of help snap us out of this low price environment that we're currently dealing with but I'm not sure that there's anything on the immediate agenda that would lead us to believe that we're going to see a spike in exports any time soon.

Fulton notes we're seeing a 30 percent increase in chicken supply and the availability of beef has climbed as a result of heavy carcass weights.

He says it seems North America will be awash in meat and poultry and, while the packers are making pretty decent profits, this is putting heavy pressure on producer profitability.

Source: Farmscape