Friday, February 19, 2016

Pig glut looming this fall

There is another warning out that North America will have more market-ready hogs than packing-plant capacity to handle them.

Tyler Fulton of h@ms Marketing Services says “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.

"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 also 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.