US pig outlook remains pessimistic

By Joanna Levin

TRADERS and analysts remain pessimistic about United States hog (pig) returns, saying recent gains are only a short-term blip in an otherwise over-supplied market.

In Chicago, the lean pigs contract closed yesterday (Monday) at 60.6¢/lb (36.2p/lb) for June, having lost a cent from a week earlier. The June contract has rallied by about 10% since mid-March thanks to better margins for the packers between the cost of live animals and carcass values.

But many analysts say the outlook is bearish. Some livestock economists expect pigs to hit a 26-year low this year as a current surplus of market pigs, already 8% up on last year, hits the market. The slaughter rate is expected to reach a record 102 million pigs this year.

The latest US Department of Agriculture report on pigs indicates that the breeding herd was up 2% year-on-year on March 1, an improvement on the 5% annual increase reported at the end of 1997.

But, a further slowdown in the rate of breeding herd growth depends on pig producers keeping only 2% more sows for the swine-breeding herd. Some analysts predict that this spells hard times ahead for producers.