Tuesday, October 04, 2016

Record hog numbers lead to low prices; cattle production also up, as prices remain low

Lean-hog and live-cattle future prices
per pound (WSJ graphic)
A record number of hogs being produced for food has led to a seven-year low of 48.925 cents per pound, Kesley Gee reports for The Wall Street Journal. The Department of Agriculture estimated the nation's hog and pig herd as of Sept. 1 at 70.851 million head, the largest on record for that time of year. Numbers are expected to continue to grow.

"The figure illustrates how producers responded to lofty prices and profitable margins at the start of the summer by breeding more animals—before a sharp drop in prices to multiyear lows reversed the economics for many farmers," Gee writes. "Part of the problem is livestock’s biological limits: a sow, or female breeding pig, gestates for around four months before delivering a litter of pigs. Market conditions can change drastically from the time a farmer decides to expand operations to when those animals are ready for market."

There is also concern about beef prices, Gee writes. The Chicago Mercantile Exchange showed that live-cattle futures for October increased 0.03 percent, to 98.925 cents per pound, up from a low of 97.35 cents in early trading, the lowest since November 2010. "In the week through Oct. 1, meatpackers produced 509.1 million pounds of beef, up 5.5 percent from the year-earlier period. Output has climbed 4.7 percent in 2016 over the volume produced by this time last year." (Read more)

No comments: