The Director of Risk Management with h@ms Marketing Services is crediting a recent rally in live hog prices to increased U.S. hog slaughter capacity that’s been ramping up over the past couple of months.
The USDA’s latest Quarterly Hogs and Pigs Report, released at the end of September, showed the market hog inventory increased by three percent from one year ago with the largest increase in the heaviest weight range.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says despite the fact that we’re starting to approach some record high production levels in the United States we are seeing some recovery in U.S. cash markets, likely relating directly to the new plants that have been ramping up production over the last six weeks or so.
It’s those additional plants that have probably added, on a daily basis, about 10 to 12 thousand more hogs slaughtered every day and we’re getting to a point I think where there’s a little bit of slack capacity during the week days and so packers are being forced to compete for those hogs.
The numbers that the USDA put out about three weeks ago have pretty much come to fruition so far. The heaviest market hog category was estimated at around 3.9 percent more hogs than last year and that’s pretty close to what we’ve been running at so far.
It’s still early in the fourth quarter period but I think that that is not one of the areas where there’s a great deal of uncertainty. I think there’s more uncertainty on the demand side and it’s generally understood that we can expect about three percent more pigs till the end of the year, of 2017.
~ Tyler Fulton, h@ms Marketing Services
Fulton says demand for pork continues to perform exceedingly well. He says the evidence suggests that domestic demand is strong but export demand generally appears to be somewhat sluggish.
