By Bruce Cochrane
The director of risk management with h@ms Marketing Services warns if U.S. hog numbers increase as expected and American pork producers maintain year ago level weights 2015 will see downward pressure on hog prices.
USDA figures indicate U.S. pork producers are responding to record hog prices in 2014 by expanding production.
Tyler Fulton the director of risk management with h@ms Marketing Services says that, and finishing weights will be key factors this year.
Tyler Fulton-h@ms Marketing Services:
The losses in PED over the course of the last year camouflaged the increases that the U.S. producers were making in terms of their breeding herd and also their market hog numbers.
Quite simply I think we are already in a situation where we're going to be dealing with heavier supply.
The remaining question then is whether or not they're going to be able to maintain hog weights at levels near comparable to what they did last year.
Last year they compensated for tighter numbers with significantly heavier weights and so there's some question as to whether or not those weights will drop dramatically and then as a result pork production will not yield as large an increase as what they could if hog weights maintained themselves.
But that's where the real uncertainty lies and arguably if we maintain hogs weights within a pound or two of year ago levels and we also see, as the USDA suggests, market hog numbers increase by 4.5 to 5.0 percent in the latter half of 2015 we could be dealing with very heavy supplies and pressure on hog prices.
Fulton acknowledges PED will not be a zero factor this year but, he says, it has largely been contained.