With fall officially here hog prices and market cycles often change especially after the warm, hot days of summer and now fall and winter just around the corner.

Tyler Fulton, the Director of Risk Management with h@ms Marketing Services says the balance between U.S. hog slaughter numbers and U.S. slaughter capacity will be among the key factors influencing live hog prices heading into the fall and winter.

Increasing supplies as the result of improved growth rates due to cooler weather and new crop corn coming off the fields combined with typically higher hog numbers at this time of year and higher supplies of competing meats like beef, chicken and turkey have triggered the normal seasonal decline in North American live hog prices.

Fulton says U.S. slaughter capacity will likely be the biggest factor influencing markets over the next three to four months. Back in the second week of September it wasn’t a real problem.

“The hog slaughter is coming in just under 2.3 million hogs in the United States per week and it’s generally thought that slaughter capacity is something close to 2.5 million hogs,” he said. “We’re well under that level right now but we expect that, if we continue on the growth trend that we’ve seen of about two and a half per cent more pigs over a year ago levels that we could see some weeks bump up against that hard cap of 2.5 million. I don’t expect that it’s going to have massive price implications because I don’t see it being a continual thing.”

However, says Fulton the week, for example following the U.S. Thanksgiving, which would be the first week of December, may spell the lowest cash price and that’s in large part due to that heavy supply that the industry anticipates at that time. Fulton says two new slaughter plants due to come online in the U.S. next year will be a definite requirement to avoid capacity constraints into 2017. The new capacity won’t have much impact on production this fall or winter but, as hog numbers ease next spring, there will be increased competition which will help both U.S. and Canadian producers.

The director of risk management with h@ms Marketing Services says consumer demand for pork, both domestically and on the export market, will also play a key role in influencing live hog prices this fall and winter.

“We really have to figure out a way to increase consumption but to do so without requiring significant price discounts. That’s the key to demand,” said Fulton. “We can expect that domestic consumers will choose pork over other alternatives with significant price declines but we want to avoid that. There is evidence of some declines this past spring in demand which is something we haven’t seen for quite some time and it’s a little bit concerning.”

He thinks that might be in part due to the massive price decline in beef and how that may have affected consumer decision making in the grocery store.

“No doubt we’re relying largely on the domestic consumer to buy more pork and to consume more pork and it sure would be a huge help if we could see an increase in pork exports as well but, there again, it’s largely a function of price,” said Fulton. “The lower the price for pork goes, the more of an incentive there is for both domestic and export consumers to choose pork over alternatives.” •

— By Harry Siemens