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A fresh look at the other white meat
What's the recipe for higher hog prices? Strong exports and strong domestic demand, of course. Here's a look at what's happening in the hog markets, plus a cookout suggestion that's sure to keep domestic demand strong, IF enough of you like it.
What to watch
Hog prices have rallied substantially over the past year, surpassing all time high prices with demand strong and supplies modest. The outlook in the industry is that prices will remain firm for the rest of 2011 and into 2012. Overall, hog futures have tremendous technical support at the $80.00 area. Fundamentally and seasonally, cash hog prices begin to fade into fall as cooler temps allow for animal weight gain, thus bringing more supply to market.
In the short term, traders are zeroing in on the October futures contract vs. the cash price. Currently, October futures are trading 19 cents a pound lower than cash prices, which, historically, is a wide discount. So the question becomes, will futures price rally to meet cash, or will cash edge lower to meet the futures price?
Here is why this is important: $80.00 is the "magic" number for the hog futures. If prices can stay above this level, then the outlook of firm to higher prices will easily persist, keeping hog futures in a trading range of $80.00 and $100.00. If demand fails, and cash prices edge lower, traders may take their profits on long
positions and run the other direction, thus, prompting a sell-off in prices.
Two factors to be watching in the weeks ahead:
Exports: China is one of our main export markets for pork. In fact, through May of this year, China bought nearly 130.5 million pounds of US pork, vs. 6.4 million pounds a year earlier. While that sounds like an astounding number, South Korea bought 264 million pounds of pork through May, up from 106.8 million pounds in 2010. China and South Korea buy many cuts of pork, with thoughts that hams will set new records this fall given Chinese and South Korean demand.
U.S. economy: While we expect the export market to remain firm, there is, of course, the concern regarding recession, here and globally. A global recession would be detrimental to U.S. pork demand, particularly as US pork supplies naturally increase during fourth quarter. Ham prices must trend higher, showing domestic demand is strong, along with export demand, to keep hog futures above $80.00 this fall.
What to grill
To ramp up domestic demand, here is a thought: When grilling at tailgate parties this fall, why not throw some ham steaks on the grill along with those burgers and brats. Your guests will be transfixed by the simplicity of the notion, and enamored with the wonderful flavor.
And, to add some pizzazz to your ham steaks, consider trying the glaze I created below. First, cut up the ham steaks into "burger sized" portions, grill, apply the glaze, and put the finished steak on a bun. Then garnish with some applejack cheese, mayo, lettuce and tomato, and you've got yourself a hit. You'll be enjoying pork while helping domestic demand remain strong, which ultimately keeps that hog price up.
Glaze for ham steak
1 tablespoon olive oil
1/4 cup brown sugar
1/4 cup apricot juice
1 ounce Malibu rum (optional)
Mix ingredients, brush glaze onto both sides of ham during grilling.
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