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Rising pork prices are lifting industry margins: analyst
Story Date: 7/15/2013
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Source: MEATINGPLACE, 7/15/13
Pork prices are climbing faster than hog prices and should remain solid even as demand softens after the July 4 holiday, fostering a recovery in pork packer margins, according to one Wall Street analyst.
Pork prices approached record levels in June, reflecting tighter-than-expected supplies, strong belly prices and the anticipation of renewed China demand, BMO Capital Markets analyst Kenneth Zaslow wrote in a note to clients.
The price surge pushed pork packer margins to $1 to $2 per head in June, up from a loss of $3 to $4 per head the prior month and loss of $11 to $12 per head a year ago, the analyst said.
Pork supplies declined 4 to 5 percent in June due to reduced slaughter and lower weights. Higher beef prices and expectations that China will renew whole-carcass imports should continue to support pork prices, Zaslow predicted.
Offsetting factors include generally lackluster export demand and pork packers bidding up hog prices to secure supplies, he said.
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