Post-holiday buying interest of US hog packers unexpectedly high

It is quite rare for hog supplies in the US to be tight enough at the end of December and early January to generate steady to firm prices, but buying interest by the country's packers indicates that is the case.

 

Typically in early January, hog prices are under pressure from the extra supplies along with diminished post-holiday demand.

 

Late last week, however, livestock dealers and market managers reported that several packers, especially those in the western Corn Belt, were looking for additional hogs for delivery early this week. That interest has extended into Monday (Jan 4) with the initial cash market calls mostly steady to firm.

 

If hog supplies are as current as they appear to be, cash prices could remain firm, analysts and livestock dealers said.

 

According to Ron Plain, an agricultural economist, brutally cold temperatures across the western Corn Belt over the weekend are probably slowing marketing and reducing daily weight gains, both factors being supportive for near-term hog prices. He added that producers may not want to sell more hogs when outdoor temperatures are bitterly cold as they need the animals to help keep temperatures in the barns from dropping to critical levels. For many of the operations, the animals themselves provide the bulk of the heat source for the buildings.

 

The US Department of Agriculture reported its national weighted average hog price last Thursday (Dec 31) at US$62.87 per hundred pounds. That represented a gain of US$3.63, or 6.1%, for the week.