Hog populations remain high, staying close to U.S. Department of Agriculture expectations.
Tyler Fulton of h@ms Marketing Services says because of weaker chicken and beef prices, pork demand has performed well. But the heavy supply isn't going anywhere — in fact, it's getting stronger.
Fulton says the third and fourth quarter this year could see heavier supply than processors will be able to handle.
"If we follow the normal seasonal trend, we will likely see some weeks in the fourth quarter of this year push up over 2.4 million hogs, and likely up close to 2.5 million hogs," he says. "The consensus amongst most analysts has the U.S. slaughter capacity at around 2.45 million hogs, so there could be several weeks that the supply of hogs will exceed the very capacity the U.S. has to kill them."
Fulton says producers should look ahead at covering some price risk during the fourth quarter because in those weeks of expectedly unmanageable supply, it's not just the additional hogs that will be discounted, but rather pork prices as a whole will likely go down.
Even if consumer demand stays strong, Fulton says this won't be enough to help out the heavy supplies.
Source : PortageOnline