Light at the end of the tunnel for the US hog market?
Hog prices have reached levels of value and there is now speculation that demand for food won’t be curbed as much as feared.
by Jim Wyckoff, The Pig Site
20 March 2020
This week’s sharp downside price action in lean hog futures is very likely a “washout” type move that puts in major market bottoms. Indeed, for many agricultural markets that have been beaten down so badly recently, this week’s price action may well have experienced the worst of the coronavirus-induced global economic crisis.
Hog prices have reached levels of value and there is now speculation that demand for food won’t be curbed as much as feared, which is encouraging some short covering and new commercial buying in futures markets. The key is finishing this week on a stronger note Friday.
US consumer demand for pork remains strong and if that holds it should also help to keep prices supported. It can be argued that the lean hog futures market has priced in a worst-case economic collapse. Still, meat cases are sparsely stocked and awaiting delivery trucks.
The possibility of coronavirus impacting work at hog processing plants continues to keep the market on edge, as the need for staple food supplies is high and market-ready hog supplies are abundant.
Reports this week said China will auction another 20,000 MT of pork from its frozen state reserves on March 20. It is doing so to stabilise pork supplies and tame inflation in the wake of African swine fever followed by the coronavirus.
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