The expected recovery in hog prices might take a little longer since a United States Department of Agriculture report found more hogs than expected will be ready for slaughter this summer.
Hog cash prices and summer month futures contract values on the Chicago Merchantile Exchange have dropped since the release of the March 27 USDA Hogs and Pigs report, but analysts say the forecast for better prices from September to December remains accurate.
“The long-term impact is probably not going to change too much,” said Manitoba Agriculture market analyst Janet Honey.
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“But for the short term . . . prices could be lower than expected for two to three months.”
The August lean hog futures contract in Chicago had been climbing most of 1999 and had reached about $57 (U.S.) per cwt., before the Hogs and Pigs report. After the report, the August contract dropped to $55.50.
The report found there was one percent fewer pigs on American farms on March 1 than on the same date one year before. Some analysts had expected more than a two percent decline.
A bigger concern for some analysts, Honey said, is the amount of stored pork in packer coolers. There is 17 percent more than at this time last year.
“They’ll have to get rid of all that pork before the packers will have the incentive to pay higher prices for pigs,” said Honey.
University of Missouri analyst Ron Plain says the stored pork and the stable number of hogs coming to market means the traditional summer price boost will be weakened.
“Don’t look for any quick jump in cash hog prices,” wrote Plain in his March 29 hog market outlook. He said fall and winter should be better.
The Hogs and Pigs report says spring farrowings are down seven percent from last year, and June to September farrowings are also expected to be down by seven percent.
“Summer live hog prices should peak in the low $40 range because of the steady number of hogs, but because of the reduced spring farrowings “the fall decline in prices should be quite modest. Look for fall live hog prices to drop no lower than the mid-30s.”
