Farmscape for February 20, 2019
HAMS Marketing Services reports abundant hog supplies and ongoing trade issues are putting downward pressure on live hog markets.
Since the start of the year the hog slaughter has exceeded last year's levels by about four and a half percent, approximately double the increase that had been anticipated.
Tyler Fulton, the Director of Risk Management with HAMS Marketing Services says U.S. packers have slaughtered well over 2.5 million hogs during most weeks this year and pork supplies are backing up.
Clip-Tyler Fulton-HAMS Marketing Services:
The demand side is performing reasonably well from the domestic demand standpoint but suffice it to say I think consumers in North America are going to be purchasing pork for less money.
Because of the sheer volume of pork that's out there and the constraints to shipping that pork off shore, the consumers are going to be buying that pork for cheaper just because of the sheer volume of pork.
That's not to say that demand has failed because demand is a function of both the quantity and the price at which they're willing to pay.
It's kind of early days but I think demand is probably faring OK.
Where the issue lies is probably on the export markets.
Leaving supply aside, the export markets are not performing as well as one would hope.
We've still got retaliatory tariffs on U.S. pork coming from Mexico that responds to the U.S. steel and aluminum tariffs.
There's that that is probably the single biggest factor that has pressured ham values lower.
In fact ham values are trading among the lowest levels that we've seen in several years.
Fulton notes, ordinarily, China would be considered a good opportunity to increase exports but in the current environment with no signs progress in the U.S. China dispute the market is factoring in skepticism that we're going to have a resolution to some of those trade issues.
For Farmscape.Ca, I'm Bruce Cochrane.
*Farmscape is a presentation of Sask Pork and Manitoba Pork