By Joanna Newman
SINCE the Thanksgiving holiday last week, US pig prices have continued to bounce along at 34-year lows.
There is a collective sigh of relief that prices have not fallen even further, and some analysts are even emerging from the bunkers to suggest the market could be due for a rebound.
But most pig market commentators are not sticking their necks out. They have predicted too many times in recent months that the market simply could not fall any lower and then been proved wrong.
The Chicago December lean hogs futures contract closed on Thursday (3 December) at 28.3¢/lb, compared with 29.07 just before the Thanksgiving holiday, but up slightly from a fortnight ago.
The cash market has recovered and this should help support futures prices. A week ago, packers were paying just 14¢/lb for market-ready pigs. Today, that level has bounced back to 18.00-19.50¢/lb.
While the packer market has picked up a little, it is still down by about a half in recent months. The market fundamentals remain discouraging.
The USA has lost a significant amount of slaughterhouse capacity over the past year and this is creating a bottleneck. Even if there is an increase in consumer demand, the overworked packers can afford to bid low prices for live animals because pig producers cannot go elsewhere.