H@ms Marketing Services reports the typical spring rally has begun in live hog prices.
Spring and summer is typically when North American live hog prices cycle higher. Tyler Fulton, the Director of Risk management with h@ms Marketing Services says for the last couple of weeks we’ve seen some pretty decent improvements in U.S. cash prices.
This is fairly standard for this time of year. We start to see increasing signs of tightening hog supplies which typically leads to the big rally over the spring time frame. The unique thing I think about this year is that we really took prices down low in late March, lower than what most had anticipated and so to date our spring rally has really only kind of taken us back to levels that we were at kind of in mid-March.
It’s still a bit early to say whether or not we’re going to follow the same trend but there’s no doubt the last two weeks of cash market trade has been positive in that we’ve recovered a good chunk of what we lost over the previous six weeks or so. So the supply is tightening but very slowly.
The hog slaughter over the course of the last six weeks to two months or so has averaged about three and a half to four percent larger than what we saw last year. That trend is likely to continue where we’ll consistently outpace year ago levels and that’s going to be probably the predominant market feature over what remains of 2018, this heavy supply right straight through until the end of the year.
~ Tyler Fulton, h@ms Marketing Services
Fulton cautions, if we expect the market to keep up with last year’s price levels, demand will need to keep pace with growth on the supply side. He says U.S. domestic demand remains solid but the wild card comes from the export market where the U.S. is renegotiating trade agreements and there’s a lot uncertainty over long term channels for U.S. pork.
