Barrow and gilt prices are lagging last year and the 2013-2017 average, and there are many reasons to think they will remain challenged for the rest of the year. But a market analyst said they are likely to resemble the average seasonal directions by the end of the year.
There is an adage among traders that says “never fade the seasonals,” and to “view fundamentals only in very broad strokes,” and these may come into play again this year in the slaughter hog market.
PRICES STRUGGLING
Ron Plain, well-known University of Missouri Professor Emeritus, writing for the National Hog Farmer said hog prices are lagging well below year-earlier levels and price movement has been as much sideways as up.
Typically, barrow and gilt prices move higher at this time of year, heading for an annual peak sometime in early July.
However, they aren’t following the average trend. They are following a pattern much like 2018 where they showed an early price peak in mid-February followed by a decline to a major low the second week of April.
From there, last year’s slaughter hog prices rose sharply to set the annual high in mid-June before dropping to the annual low in late September.
PRICE TRENDS DIFFERENT BUT THE SAME
It could be argued that last year’s hog prices were different from the 2013-2017 average, and they were lower all year. This year’s prices could be even lower with rising production and challenging export markets, but the overall trend may still be recognizable for its seasonal influences.
Seasonal trends got to be seasonal trends because there are things about the seasons that affect supply and demand. It matters little just what these seasonal aspects that dictate prices are. It only matters that they happen each year.
Those seasonal supply and demand factors may even change, grow or contract from year to year and over time, but their relative differences still will grow a weekly price chart that reflects the seasonals.
In the case of barrow and gilt prices, 2018 prices made some peaks and valleys, but in most cases, they only exaggerated seasonal bumps and valleys in the previous five-year average.
When looking ahead to 2019 barrow and gilt prices, there is a strong seasonal tendency for prices to rise to a mid-year peak and then to slide into December.
Rising hog and pork production may keep actual average weekly prices below last year and well below the seasonal average all year, an analyst said. But it’s almost certain that the annual high will come at mid-year.
CATTLE, BEEF RECAP
Cash cattle trading last week took place at mostly $125 up to $126 per cwt, up $1 from the previous week. On a dressed basis, cattle traded from $198 to mostly $199 to $200, steady to up $2.
The USDA choice cutout Wednesday was down $0.78 per cwt at $216.49, while select was down $2.04 at $211.50. The choice/select spread widened to $4.99 from $3.73 with 110 loads of fabricated product sold into the spot market.
There were no heifer and 15 steer delivery notices at 1 on Wednesday. There also were 15 steer reclaims at 1.
The CME Feeder Cattle index for the seven days ended Tuesday, was $141.10 per cwt, down $0.18. This compares with Wednesday’s Mar contract settlement of $143.87, up $0.12.