Hog glut gains as U.S. exports drop most in decade

Beef Products

Russia banned U.S. pork and beef products in January, citing ractopamine. The country also barred some pork from Germany, the Netherlands, Spain, Mexico and Canada in the last several months because it said production facilities failed to meet safety standards, according to Rosselkhoznadzor, the food safety regulator.

Hedge funds and other large speculators are betting on higher prices again for the first time since February, after being bearish for five consecutive weeks, U.S. Commodity Futures Trading Commission data show. Their net-long position of 2,967 futures and options contracts is still only about 13% of the average bullish wager over the past five years. One futures contract is currently valued at $35,610, bourse data show.

Futures Prices

The anticipated slump in prices may be curbed by a seasonal surge in U.S. demand as warmer weather spurs more grilling outdoors. Production typically drops to its low each year from May to July because animals tend to gain less weight when temperatures rise. Futures will have a “spring rally into the summer” and exceed 90 cents a pound, said David Kruse, the president of CommStock Investments Inc., a brokerage in Royal, Iowa, who has tracked the market since the 1970s.

Lower futures prices won’t necessarily mean cheaper meat for consumers, according to the USDA, which is predicting a 3% to 4% gain in retail costs this year, the same as its outlook for overall food inflation. Global meat prices fell 2% in March, the most since June, the United Nations’ Food & Agriculture Organization said April 11.

Retail pork-chop prices rose 1.9% in the U.S. this year, compared with an 8.2% rally in ground beef and a 2.2% gain for boneless sirloin steak, according to the Bureau of Labor Statistics. Pork consumption will rise 2% to a three-year high of 46.8 pounds per person, as beef demand retreats 3% to the lowest since at least 1970, USDA data show.

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