The historic run of hog and pork prices the first six months of the year, which culminated in record fresh pork values last month, could ease the second half of the year.
Cattle prices, on the other hand, could make a run of their own in the months ahead as the direction of hog and cattle markets could essentially trade places, according to industry experts.
“There’s no comparison to the type of run we saw in pork and the lean hog prices,” Daniel Blunzer, of New Frontier Capital Markets, said after baby back rib prices peaked at nearly 94% higher than 2019 prior to the Fourth of July holiday.
“What I think happened is you had stuff sold retail and at the same time restaurants were opening back up and refilling pipelines,” he noted. Fresh pork prices “have certainly started to come down the last several weeks. The pipeline is full. Whatever panic (buying) happened is done.”
The National Pork Board reported the amount of pork in cold storage was about 27% lower in April than average, which also contributed to the recent runup.
“Now that foodservice demand is back, and they have little freezer stock, the race is on to outbid each other,” NPB noted. “We expect prices for ribs and other fresh pork items to pull back from current levels. Some of that has already occurred.”
Typically, the supply of ribs in the freezer doubles from August to February.
Meanwhile, China remains a “wildcard” as hog prices plummeted there as the Chinese attempt to rebuild their swine herd from African swine fever losses.
“If China gets its pork production in line, there will be less of a void in international meat channels,” Blunzer said. “It’s definitely a wildcard.”
Lean hog futures this month show a pullback from around $102 per hundredweight in August to $84 by October.
“It’s still a relatively high price for hogs,” the analyst said.
Meanwhile, live cattle futures show an uptick from around $122 per hundredweight in August to $132 for December. Blunzer said he plans to revise his own estimate up from $120 for the fourth quarter.
“We’ve never seen this type of disparity between fed cattle prices and beef. It’s hard to figure out exactly what’s going on or if they’ll come back to an historical relationship,” Blunzer said. “I’m still leaving open the possibility if the (cattle market) dynamics shift, easily $10 per hundredweight of packer margins could be given to the other side and make everyone happy.”