The general manager of h@ms Marketing Services predicts increasing downward pressure on live hog prices moving into the third and fourth quarters as hog supplies increase and demand for pork slips.
Typically live hog prices rally from April to early June driven by a tightening hog supply and increased demand for pork due to barbecue season but this year prices actually fell through late April and early May before beginning to pick up in about mid-May as supplies tightened.
h@ms Marketing Services general Manager Perry Mohr says most industry people feel we’ve now seen the low point in supply and supplies will start to increase marginally which will pressure live hog prices moving into the summer.
Demand is the key drive behind our hog prices and demand was quite robust throughout this last month and that’s why you saw the run up in hog price.
We saw a drawdown in cold storage over that period of time which was positive.
On the negative side of things in the big picture, when we look outside of North America, there’s strong indicators that are suggesting that some of the key countries that imported a large amount of pork last year are not going to do so this year so there’s a big concern as we head into the third quarter and fourth quarter that there could be quite a bit of pressure on hog prices.
Our organization has strongly encouraged producers to take some kind of protection from a pricing perspective to mitigate the negative effects of a big decrease in the hog prices due to the lower demand levels.
Mohr suggests factors to watch moving forward will include weekly U.S. slaughter numbers, the condition of the U.S. corn crop, news of any significant export sales and the value of the Canadian dollar.
