EU financial crisis may hamper pork demand

The European debt crisis roiling world financial markets may also hit the hog market, just as the pork industry financials are improving, according to reports.

In addition, a stronger dollar has dimmed prospects for meat exports, according to Purdue University Extension Economist Chris Hurt.

Global economic concerns have crystallised since the peak in prices early this month, when Chicago lean hogs topped US$0.90 a pound, and live hogs reached the mid-US$60s per hundredweight.

Last year, when lean hog prices fell below US$45 a pound for the first time since 2002, demonstrated just how critical a recessionary economy was in weakening pork demand, Hurt said.

Hurt noted that last year demonstrated just how critical a recessionary economy was in weakening pork demand, stressing that a more cautious world now likely means some moderation in pork prices from recent lofty levels, but prices are not going to fold either.

Furthermore, retail prices are set to hit a record high of about US$3.10 per pound, up from US$2.92 a pound in April, as retailers, who have been absorbing rises in wholesale prices, exploit the summer barbecue season.

He also predicts that live hog prices will average near US$60 per live hundredweight in the second quarter, then drop into the US$56-60 range in the third quarter. Hurt predicts a 2010 price average of US$54.

With grain prices weak, this would still leave producers with a healthy profit, of some US$21 per head, although this would be insufficient to wipe out the losses of 2008 and 2009, one of the worst periods in the industry's history.

Chicago lean hogs have already lost significant ground from the early-month peak, with the June lot standing at US$0.817 a pound at 14:00 GMT.