Numbers should grow
I still expect numbers to grow over the coming weeks. I expect packers will be able to lower their bids in coming weeks and thus grow margins. More hogs will still move to market in spite of those lower bids simply because there are seasonally more hogs that must move. But it will be difficult to catch up to my forecast levels quickly unless a significant number of hogs are backed up on farms.
Finally, Friday’s Cattle On Feed report indicates that cattle numbers and beef supplies will remain very tight in Q1 of 2014. August placements were the lowest on record for August at 1.788 million head, 10.9% lower than last year. Sept. 1 feedlot inventories were the lowest for September since 2003 and were 7.2% lower than last year. Lower beef supplies and resulting high beef prices have been a positive influence on pork demand all this year and it appears that influence will continue. Higher chicken numbers and lower chicken prices will, of course, have the opposite impact but the magnitude of the beef price strength and the recent re-positioning of pork (“Cook it Like a Steak”) have me hopeful that the positive impact will dominate. I believe we are, barring any big snafus, in for a good period for pork demand.