Hog futures prices have fallen significantly over the past two weeks.
Tyler Fulton is Director of Risk Management at Hams Marketing Services.
“We are seeing quite a negative influence from lean hog futures in the United States, which likely represents weaker fundamentals going forward. The reality is that the North American pork export market has shifted very significantly over the last six months, where Chinese demand has fallen by around 75% from year-ago levels and that’s really disrupting the trade flows that had been building up over the last few years since the African swine fever has started affecting this country.”
He notes that we have seen more recent weakness due to more acute fundamental issues in the spot market. There has also been a ramp up in production and general weakness in the pork market.
Fulton says we see a counter-seasonal trend developing with US spot markets.
“Normally at this time of year we can expect slaughterhouses to be quite aggressive bidders as the supply of pigs is tight. Partly due to weak demand and also just a ramping up production. More of a recovery in pork production largely in the United States. They’re easing their offers. Really, the effect has been a cash market that’s been flat, as we see normally a fairly large increase in the spring, which represents a tight supply and a good demand for grilled meats.
He says the question going forward is whether the pork market will begin to firm up, representing more of that typical summer demand that helps support prices.