By Joanna Levin
AMERICAN pork retailers are enjoying their best margins in ten years, benefiting from an ample supply of pigs in the domestic market which is depressing meat prices.
Pork prices as a percentage of retail prices have dropped from about 34% to a mere 22% over the past year, according to the US Department of Agriculture. Retailers are paying 57.4¢/lb for their pork cutout, compared with 58.7¢/lb a week ago and 74.2¢/lb this time last year.
Producers, however, are hoping that the futures market can be led higher by gains in the cash pig price. But it appears that market may be running out of steam.
The Chicago July lean pigs contract closed on Tuesday (16 June) at 62.8¢/lb, almost unchanged on the week. Meanwhile, the July pork bellies contract closed at 61.05¢/lb, down about 1/2¢ from last week.
Both markets have rallied strongly since March, with pig prices up 15% and pork bellies up 30%. But they have yet to return to their previous highs of late last year. And with a potentially bearish Government hog report due out at the end of the month, many traders are taking a cautious attitude.