Hog markets have made a complete about-face over the last month.

After exceeding price expectations in early fall, hog values have declined sharply over the last five weeks.

"September was great. We saw counter-seasonal prices with the pork cutout holding at 90 dollars, which is phenomenal, but over the course of October, we've completely taken those gains away. As it sits right now, our cash prices are approaching what we saw a year ago, which is the first time we've seen that in a number of months," says Tyler Fulton, director of risk management with H@ms Marketing Services.

He says the price slide is partly due to a complicated combination of factors that led to delayed marketings in late summer. "What we saw in August was a deficit in the number of hogs that were being marketed and slaughtered, by about 7 or 8 percent," he says. "A lot of those were delayed - maybe they had a disease issue, we started feeding some higher quality corn, and of course, the cooler weather tends to improve growth levels - and that's why we have seen a 1 to 2 percent increase in slaughter over just the last few weeks."

"That's really an 8 percent (month-over-month) surge in supplies. Typically we would see fairly steady supplies from mid-September to the end of October."

He expects prices will stabilize by mid-to-late November. "I would think that by the end of November we'll probably have dealt with most of the delayed marketings and at least be running hog slaughters that are 1.5 to 2 percent under last year's levels. It would be at that point that maybe packers would be forced to compete for some supplies."

~ Monday, November 8, 2010 ~