Typical Seasonal Increase in Hog Numbers Takes Toll on Live Hog Prices

27 September 2016, at 12:00a.m.

CANADA - The Director of Risk Management with h@ms Marketing Services says the typical seasonal increase in hog numbers combined with faster growth rates is taking a toll on live hog prices, writes Bruce Cochrane.

Live hog prices have faced increasing downward pressure over the last couple of weeks.

Tyler Fulton, the Director of Risk Management with h@ms Marketing Services says, more than anything, we've got a heavy supply of hogs coming in, which is fairly typical at this time of year.

Tyler Fulton-h@ms Marketing Services:

We start to see larger numbers that follows the normal seasonal trend but also the other factors that come into play are fresh corn making its way into market hog rations that tend to spur faster growth and cooler temperatures that also contribute to faster growth.

The combination of those three things has supplied growing at a fairly quick pace which has put a lot of pressure on cash markets over the past two weeks or so.

As it sits right now we're approaching the lowest levels for the year so far but, what's kind of unique about this is that, packers in the United States are arguably still in an excellent position.

Their profit margins are very strong.

Pork price are high in terms of wholesale values but packers are benefitting from the fact that there's this heavy supply.

They don't really need to compete heavily for the live animals and that's resulted in really wide margins for them.

In terms of slaughter capacity, Fulton says we're still in good shape with the weekday slaughter generally being filled and the excess being added onto a Saturday kill, which where the excess is generally placed in the fall months.

He says, if the trend continues as is, we might see some weeks over the two months were hog numbers max out capacity, which would be troubling.