Large US pork supply may hurt hog prices

US pork supplies in December increased sharply by 36.3 million pounds, the largest one-month increase in four years and a sign that hog prices may be pulled down, according to theUSDA and analysts on Thursday (Jan 22).

The pork supply has grown 20-percent more than a year ago, said Don Roose, analyst at US Commodities Inc.

Large pork production in 2008, plus a decline in domestic and foreign demand due to worldwide economic slowdown were blamed for the increase.

There were record or near record supplies in cold storage in almost every month in 2008, said Bob Vande Vorde, livestock analyst with Mast Group LLC.

The USDA on Thursday (Jan 22) said there were about 549 million pounds of pork in US warehouses as of December 31, up 7 percent from November and up nearly 20 percent on-year.

The large supply will keep a lid on market rallies and there will be excessive stocks if exports decline, said Jim Clarkson, livestock analyst with A&A Trading Inc.

"Total pork is bearish. We will call hog futures down 0.200 cent," Rich Nelson, analyst at Allendale Inc, said of Friday's Chicago Mercantile Exchange hog futures.

The large pork supply should decrease in the months ahead, mainly because US pork production is expected to drop in 2009. Losses on hogs in 2008 had producers reducing herds, which should indicate less pork this year.