By Joanna Newman
THE rally in US pig futures bringing the market to a 10-month high last week has proved unsustainable as prices have retreated again.
There has been little surprise at the drop in the market. The domestic industry is burdened with the highest stock levels for the time of year in decades, while monthly pork production is still hitting record highs (1.74 billion pounds in March), despite efforts to cut back.
The cash market price for live pigs paid by the packers has remained steady and futures values have had to drop again to close the gap.
The Chicago June lean hogs contract closed on Tuesday (4 May) at 58.02¢/lb (79p/kg), after topping the 59¢ mark late last week.
The May pork bellies contract has followed a similar path, declining to 57.35¢/lb on 4 May from over 58¢ last week.
On the positive side for pig farmers, pork product values in the cash market are fairly firm, with bellies up at 54-55¢/lb from 52¢ last week.
This suggests that packers may be able to afford to pay more for live pigs thanks to improved margins.
The deteriorating trade dispute with the EU over US beef on cattle raised with hormones could bring an indirect benefit to the US pork industry.
A group of US senators has called for retaliatory duties on $500 million (£310m) of EU exports to the USA, mostly pork, if the EU refuses to receive shipments of US beef.