US pig prices rallying strongly on tight supplies

Thursday, 6 May 2021

US lean hog futures have been staging a remarkable rally in recent weeks, on the back of both tighter supplies of pigs, but also strong pork prices. More recent losses in the Chinese herd, adding volatility to the pace of its rebuild, will also be adding to the bullish sentiment in the US.

The USDA price for carcases in Iowa/Minnesota was $121.66/cwt (over £1.90/kg) on 5 May, more than double the price at the beginning of the year (£0.80/kg on 4 January). Futures prices have been rallying strongly too. Some market reports point to a lot of speculative interest, but also indicate the market may be increasingly comfortable building in higher feed prices. Prices for cattle going onto feedlots, by comparison, have plummeted.

Lower numbers of market-ready pigs are reducing supplies now, and a reduction in the number of breeding animals and reported farrowing intentions could lead to reduced supplies later in the year. The amount of pork in store is also low, totalling 452 million pounds on 31 March, 27% lower than the year before. Strong demand for frozen inventory is leading to higher pork prices, fuelling the market price for pigs.

US imports of fresh/frozen pork in March were 32,000 tonnes, 35% more than a year ago, but still a little below 2019. They were also 9% higher year on year in February (at 26,000 tonnes). On the other hand, exports were steady on year-earlier levels at around 230,000 tonnes, having fallen 13% year on year in February (to 190,000 tonnes). It is possible that the tight market situation in the US could limit export volumes, at a time when buyers in China and the Philippines, in particular, could be looking for more pork.

Duncan Wyatt

Lead Analyst - Red Meat

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