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High Hog Supply Tempers Effects of Increased Slaughter Capacity
Tyler Fulton - h@ms Marketing Services

Farmscape for November 7, 2017

The Director of Risk Management with h@ms Marketing Services anticipates the full benefit of new U.S. slaughter capacity will be felt next spring and summer.
Over the past week or so live hog prices have declined.
Tyler Fulton, the Director of Risk Management with h@ms Marketing Services, says it's a really interesting dynamic right now.

Clip-Tyler Fulton-h@ms Marketing Services:
What we've seen in the last week or so is cash markets starting to trail off a little bit.
What I'm talking about is U.S. regionally negotiated prices.
What I think is happening is there's just an overwhelming supply that's available to them despite the fact that we've got these additional two new plants that are coming on stream.
Things are never perfectly smooth in terms of ramp ups and we don't have good information on how these plants are performing but I think it's fair to say that they have had a very positive impact to the cash market trend over the course of the last two months since they've been running but it's not linear.
It's not a perfect relationship and we're seeing a little bit of weakness recently possibly because of this heavy supply.
Typically at this time of year, over the next month or so, we ramp up hog slaughter and, as a function of that pork production in the United States, to their highest levels of the year.
This year is no different in terms of that normal trend but our starting point was roughly three to four percent higher and so what we expect is to see some record high pork production and hog slaughters that come in over the next month or two and that's likely to put pressure on prices.

Fulton anticipates the biggest effect from these new plants coming on stream will be in 2018 when see a tightening of hog supply in the spring and summer months and packers are forced to compete fiercely for those limited supplies.
For Farmscape.Ca, I'm Bruce Cochrane.


       *Farmscape is a presentation of Sask Pork and Manitoba Pork

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