CHICAGO - U.S. hog prices should stabilize in coming weeks and possibly move higher as meat packing companies respond to greater hog numbers by escalating pork production, analysts said.
"We are adding kill hours," said Bob Anderson, analyst with Commodity Services Inc. "I think we are at the bottom of the cash hog market for the next 30 days."
Anderson said increasing demand for hogs could produce $3.00 to $5.00 per cwt higher hog prices before October. After that, a greater hog supply should turn prices lower again.
A rise in hog marketings last week sent cash hog values tumbling $4.00 to $5.00 per cwt. In interior Iowa trade on Wednesday, hogs sold at $51.00, down from $55.50 on August 25.
Smithfield Foods (SFDS) last week said it will add a production shift this Friday at its John Morrell and Co pork plant in Sioux City, Iowa. Analysts said other pork companies also appear ready to increase production.
"All of that should add up to better competition for hogs," said Doug Harper, senior livestock analyst at Brock Associates. "For now I look for the market to stabilize at around the $50 area."
Last week's bulge in hog sales was evident in the U.S. Agriculture Department's slaughter report which showed estimated weekly slaughter at 1.802 million head, up four percent from the previous week and up 2.5 percent from a year ago.
"You will see a slow gathering of momentum through this year," said George Dahlman, a meat company analyst with Piper Jaffray, of the rise in hog slaughter.
Dahlman said increased hog numbers also should help meat packing companies financially in coming months.
"It would look very good for their outlooks," he said.
Brock's Harper expects weekly slaughter to remain near 1.8 million head through September and then gradually rise to about two million head by late November.
Analysts said demand for the pork will have to rise with the increase in production. CSI's Anderson said supermarkets will need to aggressively advertise pork in coming weeks if his price forecasts for hogs are to develop.
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