US pork prices up as herd numbers decline

 

 

Prices for pork in US are up about 10% from last year's holiday period and are likely to go up another 10-15% after hog futures markets rose allowable daily limits of US$3 per hundredweight on Monday (March 29).

 

The market surge on the CME was in response to a USDA report late Friday showing a 3% decline in hog herds in the US and Iowa.

 

Hogs for June and July delivery closed Monday above US$81 per hundredweight, up from about US$50 last September. While cash hogs for daily delivery have been north of US$50 per hundredweight for several weeks now, finally giving Iowa's 8,300 hog producers hope for their first profits since 2007.

 

Traders noted the USDA report showed a 4% reduction in sows and farrowings (births), which means tighter supplies this summer during the backyard grilling season.

 

The report was a surprise to traders who had worried that despite a 7% reduction in hog slaughter during January and February, hog producers might begin increasing their herds again, as prices have increased since the year's start.

 

That concern had pushed prices for hogs down by about US$4 last week before the USDA report was released.

 

Meanwhile, Canada, a strong supplier of hogs into the US market for feedlots and slaughter, has reduced its herds by 12%, thanks to a government program that pays farmers to cease hog production for three years.

 

The surge in prices would not affect prices for hams sold this week for Easter, but it does foretell higher prices for pork chops and ribs going into the summer grilling season.

 

Pork bellies, from which bacon is made, also traded strongly Monday. Belly futures also were up the maximum US$3 per hundredweight to US$96.70.

 

Hog prices fell as low as US$45 per hundredweight on the futures board and below US$40 in cash markets through last fall, when demand had fallen due to soft export markets and the AH1N1 scare.