By Joanna Newman
JUST when US pig producers thought things could not get worse, prices have dropped yet again.
US pig prices have now hit thirty-year lows and market analysts are refusing to predict when prices will hit rock bottom.
The cash pig price is plummeting, at 19.5-20.5¢/lb (25.9-27.2p/kg) currently, down from 24¢ a week ago and 27¢ a fortnight ago. Weakness in the cash pig market has dragged futures prices lower. The Chicago December lean futures contract settled on Tuesday, 3 November at 35.52¢/lb, down from 39.85¢/lb a week ago and down from 55¢ in May.
Massive over-capacity is to blame, and the situation could worsen if producers carry out their expansion plans in 1999. In September, pork production hit a record high of 1.6 billion lbs, up 7% from a year ago.
Given the sheer quantity of pigs on offer, the packing houses are not interested in purchasing and slaughtering breeding stock. The next monthly report could show that several major pig producers have been forced out of business altogether.
On the export side, few analysts are still pinning their hopes on rumoured food aid to Russia. There have been no official announcements of pork shipments from the USA to Russia and other countries are expected to compete fiercely for the business.