Hog Prices Down, Supplies Up ? Reason for Concern?

September 10, 2007 — 

In recent weeks, hog prices have declined while supplies continue to increase. Should we be concerned?

Dr. Steve Meyer, Paragon Economics, expresses some concern that prices have shown a 6% to 9% decline in the last couple of weeks along with a 2.4% slaughter increase. While he indicates this could be nothing more than the normal "demand elasticity", he cautions that the trend of this year's supply-demand curve means that "stable" demand is, in reality, a weakening relative to recent history.

In the Daily Livestock Report, he indicates that this trend merits attention given the rumors within the industry of significantly increasing supply in the fall due to improved survival and performance.

Meyer, citing export figures just released by USDA, also notes that pork export volume in July increased 1.5% over last year. This is the first month since January that exports exceeded last year's monthly volume. Exports to Japan and Mexico declined 2.7% and 12.1% respectively compared to July, 2006. These declines were offset, however, by exports to China, Hong Kong and other smaller markets. The year over year export volume comparison has trended negatively since November, 2006 until the modest rise in July.