By Joanna Newman
THE spring rally in pigs has proved short-lived and futures prices are plummeted 13% in a month following another week of losses.
The Chicago June lean hogs futures contract dropped to 51.5¢/lb (70.3p/kg) on Tuesday (2 June), compared with 53.6¢ just a week previously.
The contract is now at its lowest point since January.
Clearly the market has still not recovered from the monthly cold storage report released by the US Department of Agriculture a couple of weeks ago, which showed that oversupply is even worse than producers had feared.
As reported previously, stocks of pork bellies were up almost 87% year-on-year in April.
Looking ahead, it seems that the industry has failed to react to last years market freefall by taking the necessary steps to shrink the national herd.
Headcount statistics and farrowing intentions paint a worrying picture of structural imbalance through the rest of 1999, according to analysts.
Traditional pig farmers, who saw their income drop 28% on average in 1998, are blaming market conditions on industry consolidation into the hands of a small number of large operators.
Hard-pressed family producers are becoming increasingly active and outspoken. A group named the Campaign for Family Farms has gathered 18,500 signatures to force a referendum on the mandatory pork checkoff.
This is a controversial scheme that collects money from producers to pay for national pork promotion.
On the bright side, the drop in pig prices should ultimately feed through to the supermarket shelf and will make pork more competitive against beef.
While pig values have been dropping, the feeder (store) cattle market has moved in the opposite direction, climbing 5.5% over the past month.