By Joanna Levin
US PIG prices had another roller-coaster ride last week, bouncing back in the last two trading days after a sharp drop.
The Chicago lean pigs futures contract closed yesterday (1 June) at 61.8¢/lb, little changed from a week earlier but well up from a mid-week low of 60¢/lb.
Futures prices reacted to volatility in the cash market for live pigs and cash values fell 3¢/lb during last week to about 40¢/lb in Iowa and Minnesota and 41¢/lb at river terminals.
But the cash market bounced back yesterday, helped by a perception that the supply of pigs is tightening up. The market closed in Iowa at 40.00-41.50¢/lb and at 42.50¢/lb at the terminals. Many analysts forecast another 1¢ rally in cash prices over the next couple of days.
Despite this short-term rally, however, the domestic pig market remains depressed. Record pork supplies are estimated to jump from just over 17lbs billion in 1997 to around 18.5lbs billion this year.
And even though year-on-year exports rose 50% during the first quarter on a carcass weight basis, this only absorbed about a fifth of the increase in pork production during the same period. The US produced nearly 4.7bn lb of pork in the first quarter, compared with just under 4.2bn lb in the same period last year.