Gloomy USDA report hits small pig men

By Joanna Newman

THE struggling US pig market has suffered a terrible blow this week from the release of extremely bearish monthly inventory by the US Department of Agriculture.

The national herd has shrunk much less than expected, a mere 3% reduction in June to 60.5 million head, compared with forecasts of a 4-5% decrease.

Prices have reacted dramatically to the news. The Chicago July lean hogs contract dropped on Monday, (28 June), to 48.9¢/lb (68p/kg).

This is on a par with the prices seen last December when pig prices collapse to all-time lows. Prices compare with about 52¢/lb a week ago.

Although small operators have scaled back their pig herds over the past year in the face of unprecedented losses, the industry as a whole has failed to respond quickly enough to the market economics of supply and demand.

Commentators argue that the trend towards consolidation in the industry will enable a handful of large-scale operators to survive a downturn without cutting their herds.

Analysts gloomily predict the demise of the small American pig farmer.

Even the news that US pig producers intend to have 4% fewer sows farrow in the June-November period than last year has failed to cheer the market.

This cutback is judged insufficient to prevent 1999 from being as bad as 1998 or worse.

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