US pig market oversupplied

By Joanna Levin

PIGS remain severely oversupplied in the USA, and pig farmers are pinning their hopes on an export boost to help firm up the market. As a result, lean pig prices were mixed this week following recent lows.

The June lean pigs contract closed on Monday (20 April) at 61.75¢/lb, up slightly from the previous weeks close of 61.175¢/lb and sharply above the 50¢ level seen at the start of the month. The market has now recovered to year-end levels, but is still well below the highs of over 85¢/lb seen last spring.

Better margins for the packers between the price of live hogs and carcass values are helping to firm prices. In addition, the 20% jump in prices at the start of the month has caused further upwards momentum as traders rush to cover short positions.

The National Pork Producers Council is lobbying the USDA to provide export credits to Korea to buy pork instead of grains. Total US pork exports are forecast to drop 5% in 1998 from 1997 due to the Asian economic crisis, at the same time as the slaughter rate is expected to hit a record 102 million pigs.

Without further “GSM” credits on top of the $150m already provided, Korea will be unable the buy more pork from the US, due to its weak currency, the NPPC argues. Not surprisingly, the National Corn Growers Association is far from happy with this line of argument.