US pig prices ease off

By Joanna Newman

THE structural oversupply in the US pig industry has effectively thwarted any attempts at price rallies in recent months.

Pig and pork values have eased off again over the past week, as the excitement over recent USDA pork purchases for the food-aid programme to Russia has waned.

After the heatwave of July and early August, the current cooler temperatures have helped pig producers bring their fattened (finished) pigs to market.

This has pushed down cash prices to around 52¢/lb (71.5p/kg) from 54-55¢ a few days ago.

The benchmark October lean hog contract on the Chicago Mercantile Exchange had eased off to 42.4¢/lb (58.3p/kg) yesterday (Wednesday), down from about 47¢ a week ago and off sharply from the 55¢ level seen during the first few months of the year.

At these prices, most small pig farmers are operating at unsustainable losses and industry organisations are pushing hard for further federal subsidies to avoid widespread bankruptcies.

However, the severe sell-off of last December, which brought prices to Depression-era lows, is unlikely to be repeated, according to analysts.

Last years drop was caused when desperate producers encountered a bottleneck in slaughter capacity and were forced to accept lower bids for their live pigs by the packing houses.

The situation had been exacerbated by additional Canadian imports of market pigs at that time.

Now that Canadian cross-border shipments have been reduced and the US slaughter capacity adjusted, there is better pricing support for the US pig industry.