By Joanna Levin
AFTER a strong rally in US pig prices during the first half of May, the US pig market has suffered a sharp downturn. But analysts argue that a drop in prices was needed as the market had become overheated. The recent rally in futures prices was unjustified given the oversupply of pigs in the US, they say.
Packers have dropped their bids for live pigs, resulting in cash prices sliding by as much as 10% in recent days to 40.50-41.50/lb at the terminal. The packers have been busy, with the latest weekly slaughter rate at 752,000 head, compared with 1,031,000 last week and 688,000 this time last year.
Weaker pig products prices are also depressing the futures market. Having hovered precariously in a narrow range immediately before and after the Memorial Day holiday weekend, US pig prices plummeted yesterday (Wednesday).
The Chicago June futures contract for lean hogs lost 1.05/lb yesterday (Wednesday) to close at 60.25/lb, down about 0.75 on the week and its lowest level since late April.