US pig crisis freewheels on

By Joanna Newman

THIS has been one of the most volatile trading weeks in recent memory, but the US pig crisis is far from over.

The Chicago lean hog futures contract for the current spot month (July), which had fallen 20% in the wake of the disastrous USDA Hogs & Pigs report in late June, has staged a recovery helped in part by cheaper feed costs.

The contract closed on Monday, 12 July, at 44.8 cents/lb, up from 42.6 cents last Tuesday but still down from around 52 cents a mere three weeks ago.

As reported previously, the national herd shrank by a derisory 3% in June according to the USDA, far short of the drastic cutback needed to turn this oversupplied market around.

Indeed, the spot month pork bellies contract in Chicago is still in freefall following the Hogs & Pigs report.

The July contract has almost halved since May, one of the biggest moves ever in such a short time frame on the Chicago Mercantile Exchange.

The contract settled on Monday at 32.8 cents/lb, compared with about 61 cents in early May.

Analysts warn that small pig-farmers are unlikely to survive a second consecutive year of heavy losses and industry organisations are pushing to bring the issue of federal intervention to the forefront of the agenda.