By Joanna Newman
NEWS of record high stocks of frozen pork triggered a severe fall in pig prices this week.
Although the industry was braced for bad numbers in the latest US Department of Agriculture (USDA) cold storage report, the inventory levels proved worse than expected.
Stocks of pork bellies rose 3% in April from March, and were up 87% from a year ago.
The volatile Chicago June lean hogs contract reacted strongly, plummeting 7.4% on the week to 53.6¢/lb (73.6p/kg) on Tuesday (25 May).
In the cash market, packers are now paying 35.5-36.5¢/lb (around 49p/kg) at the terminals, down from 37.0-38.0¢ a week ago.
Wholesale pork prices have managed to hold their ground, with bellies fairly stable at 53¢.
The demand outlook appears quite favourable. Lower pig prices and high pork inventory should enhance porks competitiveness with regard to beef as the summer season picks up.
Wholesale interest in pork has grown as cattle and beef prices rally. Supermarkets are featuring pork for their retail customers in the run-up to the Memorial Day weekend (29-31 May).
Producers are no doubt praying that Americans eat more bacon this year. Pig farmers suffered even worse than cattle and sheep producers in 1998.
Their gross income dropped 28%, according to the USDA, compared with a 24% drop for sheep farmers and 6% for cattle.