USDA reports reveals massive pork oversupply

By Joanna Newman

PRODUCERS fears that the USA is heavily oversupplied with pork have been confirmed by a new report.

The amount in storage was at its highest level for the month of June since 1952, according to the United States Department of Agricultures latest Cold Storage report.

Pork stocks have now exceeded the 500 million pound (223,200t) level for seven months in a row. This helps explain the disastrous collapse in pig prices since mid-1998.

In an effort to be seen to be helping the threatened small operators, the federal government has announced a second round of aid payments to small pig farmers.

The $100 million (£63.5m) payout comprises up to $5000 (£3180) each to producers who sold fewer than 2500 pigs during the second half of 1998.

But analysts warn that handouts are not the answer, arguing that the industry heeds to address its structural problems. These include access to slaughter facilities and the consequences of corporate consolidation in the sector.

Heavy slaughter weights and lacklustre domestic retail demand are helping to keep a cap on values. However, futures values on the Chicago Mercantile Exchange have managed to stage a small bounce this week after Junes sell-off.

The Chicago August lean hog contract closed on Monday (19 July) at 47.1¢/lb (66p/kg), up from around 45¢ at the start of last week.

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