By Joanna Newman
THE pig rally that saw futures values bounce 50% from their historic lows in mid-December now appears to be running out of steam.
The Chicago February lean hog futures contract touched 41¢/lb (54p/kg) early last week, dipped to 39¢ and then recovered to close on Wednesday (20 January) at 40.82¢/lb. Lean cash prices, which doubled in recent weeks, are now steady at 42¢/lb.
Rumours that the US Department of Agriculture will include more pork than expected in its food aid programme to Russia have helped support the market. However many producers are jittery and do not believe this is enough to hold up prices.
Despite the recent recovery, the market is still well below the level needed for producers to break even, as industry associations such as the Iowa Pork Congress and National Pork Producers Council are quick to point out.
Packers need to slaughter an average of 2 million head a week to alleviate oversupply and enable a sustainable market recovery.
The latest weekly data is encouraging with 2.13 million animals processed, up 5% from last year and Mexico may take some US pigs for slaughter to help the industry north of the border.