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Lean times for US pork producers led to an unexpected hike in pork prices.
Smothered by record summer temperatures, pigs who have sweated and are now considered underweight.
In the spring, the giant hog herd of the United States – the largest number since 1943 – became overweight because of a winter that fed on relatively cheap food. Farmers reacted by selling their herds aggressively, bringing prices down to their lowest level in a decade.
Now prices are rebounding.
"Producers are no longer desperate to move pigs," said the Steiner Consulting Group, noting that prices were 22% higher than they were a year ago.
Pork prices were to be linked to the US-China trade war and an outbreak of African swine fever in China, which spread to Vietnam, Cambodia, Laos and Eastern Europe and reduced production by 30%. Part of the reason why the American hog herd has become so big is that producers were expecting additional demand from China.
This has not materialized and now the combination of low production and low weight has pushed prices up. But it is difficult to predict what will be the next evolution of prices.
Given global trade tensions and the climate, badysts admit that market trends have become more difficult to read. "This year, it has been much more difficult to try to badess these seasonal effects on supply," the report says.
Fluctuations are expected to continue during the last months of the year. The number of herds is expected to increase again, leaving US producers overwhelmed by an even larger excess of protein.
Steiner said: "In this market, the risk is that we will end up stifling domestic demand too much while waiting for large export orders to materialize. This is where the negotiations with China are essential.
"Either we need to see much more spectacular price increases in China to further stimulate import demand or more equitable conditions of competition in terms of tariffs."
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