By Joanna Levin
THE US pig market is already oversupplied and market analysts fear that the Government figures due to be released today (25 September) will show that the breeding herd is still expanding.
US pig farmers have built new facilities during 1998 at an alarming rate and, as a result, the top 150 producers expect to boost output by 28% over the next couple of years, according to figures from the University of Missouri.
Growth in exports and domestic demand can only absorb a tiny portion of the growing herd. Many expect 1999 exports to be flat compared with this year because of poor Asian demand, and, unless the pig slaughter can keep pace then the market will suffer worsening oversupply warn industry sources.
However, there is a catch. While producers need to offer more pigs to the packing houses instead of keeping them for breeding, the increase in supply threatens to drive slaughter values lower.
Currently, the cash pig market is at 29.5-30.5¢/lb at the terminals, compared with 30.0-31.5¢ a week ago, but up several¢ from August. On the positive side, the collapse in grain prices over recent weeks has lowered the break-even cost for pig producers.
The Chicago lean pig October futures contract settled on Wednesday 23 September at 41.62¢/lb, up 0.25 cent from Tuesday and up further from 40.87¢/lb a week ago.