US pig futures rocket while cash price is flat

By Joanna Newman

PIG futures have soared to a 10-month high this week, although cash prices for live market-ready pigs have stayed mostly flat amidst mixed signals from the market.

The Chicago June lean hogs contract jumped to 57.7¢/lb (78.3p/kg) on Tuesday (27 April) from about 55.5¢ last week.

Futures had been knocked lower by last weeks monthly cold storage report, which showed the highest national pork stocks for the month of March since 1952.

However, traders quickly recovered and pushed futures prices higher over the past few days.

There is little fundamental justification for the pig futures rally, as the US pig industry suffers from severe long-term oversupply.

Pork production set a record high for the month of March at 1.74 billion pounds, up 9% from March 1998, according to a new US Department of Agriculture report.

Certainly the cash market has not followed Chicagos lead. Well aware that this is a buyers market, slaughterers have refused to pay substantially more for live pigs.

Currently packers are paying in the low 30¢/lbs at the terminals, compared with 29.5¢/lb last week.