Pork prices set to soften, analyst says

CNS Canada — As the North American barbecue season winds down for another year, so too goes some strength in the pork market.

For instance, cash slaughter-weight hogs in Saskatchewan, based on the Maple Leaf Signature #3 contract, averaged $162.55/cwt last week, down $7.95 (4.7 per cent) per 100 kg, according to Brad Marceniuk, a provincial livestock economist in Saskatoon.

Prices, he said, will “probably creep lower over the next two months, just a function of seasonality.” Cutout values for hogs typically dwindle in the fourth quarter, he added.

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Other factors leading to the softening in prices include the rise in pig numbers south of the border. The U.S. hog supply is significantly larger in 2015 than it was a year ago, Marceniuk said.

U.S. hogs slaughtered for the shorter Labour Day week under federal inspection were pegged at just over two million head, down 0.5 per cent from the same period in 2014.

Part of the reason for that increase may be a slowdown in exports of U.S. pork, due primarily to the strength of the U.S. dollar.

However, there were some exceptions in the market: prices for feeder pigs have actually risen recently, with some futures contracts up a couple of bucks, according to Marceniuk.

“I believe the futures went up because the futures price is below the cutout value today.”

This may indicate that hog prices could be slightly better three or four months from now than what the market currently indicates, he said.

Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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