By Joanna Newman
AFTER a brief period of consolidation, over the past week pig prices have resumed their rally from the lows witnessed in December.
The Chicago February lean hogs futures contract closed on Tuesday (26 January), at 42.8¢/lb (57p/kg), up from 40.82¢ just under a week ago and up from 28¢ in December.
The futures market is finding support from cash values, with packers willing to pay 29-30¢/lb for live pigs, compared with 28.5¢ a week ago.
Optimists argue that the worst of the glut is over and availability is tightening up.
However, this may be due to wintry weather, which is hampering farmers ability to bring pigs to market.
Many analysts remain wary of the pig market and argue that while continuing high slaughter rates are necessary to restore the industry to equilibrium, this will prevent a sustainable recovery in pig prices in coming months.
Slaughter houses are still running flat out, with daily rates at around 385,000 head, compared with 360,000-370,000 last year.
In December, US slaughterers produced a record 1.8 billion pounds of pork, up 10% from a year ago. The pig kill was up 9% at 9.43 million head.
As a result, inventories of frozen pork are now worryingly high at 72.5 million pounds.