Forward hog contract prices have been dropping significantly over the last couple of weeks.
Tyler Fulton is Director of Risk Management with Hams Marketing Services.
"We're seeing some pretty negative influence from U.S. lean hog futures which is probably representing just weaker fundamentals going forward. The reality is that the export market for North American pork has changed very significantly over the course of the last six months where Chinese demand has dropped about 75 per cent compared to year ago levels and its really disrupting the trade flows that had developed over the last several years since African swine fever started to impact that country."
He notes we've seen more recent weakness because of more acute related cash market fundamentals struggling. There's also been a ramp up in production and just overall softness in the pork market.
Fulton says we are seeing a counter seasonal trend develop with the U.S. cash markets.
"Normally at this time of year we can expect packers to be quite aggressive bidders because hogs supplies are tight. Partly because of the softness in demand and also just a ramp up in production. More of a recovery in pork production across largely the United States. They are softening their bids. Really the effect has been a cash market that's been stable, while normally we see a pretty significant run up in the spring representing tighter supplies and good demand for grilling."
He says the question going forward is, will the pork market start to firm up, representing more of that typical summer demand that helps support prices.