Allan Bentley, Sales & Technical Manager, USA
Well, what do you say about the USA hog market? I guess it’s better than being a cat in an accordion shop. I believe some would even argue that cat has it better than hog producers. We have lost $20/ cwt on the futures from the highs. That is $45/head. Did anyone see this coming? I for one did not. The futures were holding a premium to the 2-day lean but history tells that cash should work higher at this time of year as the 2-day lean and futures need to come together. Well, they came together alright! Where do we go from here?
Here is what I know today. Demand will have to get us to higher levels. Nothing else matters. Cutout values are sure not encouraging packers to bid higher. I would argue they will do everything they can to drop the cash bids. We are killing about 100,000 head of pigs more than what the government’s report indicated we should be. My wife bought pork loin for $1.48/lb. Hot Dogs cost more than that for crying out loud. I’m not sure how but someone needs to make hot dogs out of the loin. There are as many different ways to sell your pigs as the colors of cats. It doesn’t matter, none is worth a dam right now.
Cutouts are around $81 as I write this. Last year Cutout values were about $100. Unless that cutout moves into higher levels allowing packers to bid more, we will never reach last year’s summer cash prices. In conclusion, where are we heading? Keep your eye on the cut-out value as it is the only thing going to push markets higher. That means demand and right now we have strong winds blowing in demand’s faces.