Sorry, you need to enable JavaScript to visit this website.

Hog Producers Persistent Problems

Published on: 11:35AM Jul 31, 2009

The chart of the week is sow slaughter.  First we remember that sows are the breeding inventory for swine and that a build up or reduction in the sow herd can give an early indication of pending pork production levels.  As one can tell from the chart, sow slaughter during the first 6 months of this year was anything but alarming from the buy side.  As a matter of fact, one might be able to derive from the chart that the breeding herd could actually have increased during the first 6 months.  June sow slaughter was the largest in 8 months, but sow slaughter since then has basically trended near 5 year average levels.  This is certainly alarming news for the sell side of the equation.  Hog producers have continued to struggle with poor margins.  And although the breeding herd is smaller than a year ago, growth in pig per litter yields have caused the overall hog supply to remain abundant.  So much so that live hog prices this week are trending 32% lower than the same week a year ago.  There have been recent announcements of some sow herd reductions, but more will almost certainly have to be done.  Pork demand remains poor, pork prices are deflated, and the futures markets are not presenting a profitable hedge opportunity for hog producers until the spring at the earliest.    

sowslaughter1

These comments and data are provided for information purposes only and are not intended to be used for specific trading strategies. Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that a person will or is likely to achieve profits or losses similar to those examples. Neither the information, nor any opinion expressed constitutes a solicitation to buy or sell futures or options on futures contracts or OTC products. Covered parties (as defined below) shall not be liable for any direct, indirect, incidental, special or consequential damages of any kind, whatsoever (including attorney’s fees and lost profits or savings) in any way due to, resulting from, or arising in connection with this email, including it’s content, regardless of any negligence of the covered party including but not limited to technical inaccuracies and typographical errors. “Covered Parties” is defined as American Restaurant Association Inc., ARA Trading and the employees of both companies. Commodity trading involves risks, and you should fully understand those risks before trading.