By Joanna Newman
MARKET commentators who nervously declared that the US pig market had reached rock-bottom after the Thanksgiving holiday have once again been proved wrong.
The last few days have seen further steep declines in cash and futures values, and the December lean pig futures contract has halved since July, while the market is down by two-thirds since summer 1997.
On Monday (7 December), the Chicago December contract for lean hogs settled at 25.22¢/lb, down 2¢ from Friday and from 30¢/lb at the start of the month.
At the root of the problem is lack of slaughter capacity in the USA. Packers can afford to bid at ever lower levels for live animals, secure in the knowledge that desperate US producers have nowhere else to turn. The cash hog market has dropped to 14.50-16.00¢/lb, compared with 18.00-19.50¢/lb just a few days ago.
To alleviate the crisis, the National Pork Producers Council is urging that packers give priority to US pigs instead of processing Canadian pigs and that they run flat-out seven days a week. But US slaughterhouses are already processing over 2 million pigs a week and running into difficulty shifting so much processed pork to the retailers.
In a welcome move this week Canada announced that it will partially lift its ban on US pigs entering Canada for slaughter, allowing in animals from US states free of pseudorabies (PRV).