Pig outlook: Lean hog futures bulls show solid power

The pig traders’ perspective: US primal ham prices surged $30.61 on Wednesday, which more than offset a $17.12 drop in ham prices and pushed the pork cutout value $8.26 higher. Amid the recent volatile movement in primal pork cuts, movement has been solid. Signs of strengthening cash hog fundamentals and retail demand are pushing futures prices higher. Pork supplies have tightened amid Covid-related slaughter plant slowdowns. Lean hog market bulls expect seasonal price strength as well, amid seasonal hog supply shortfalls. Rising inflationary expectations also are supporting lean hog futures. Rebounding cattle and wholesale beef prices also encouraged bulls in the hog market.

China’s 2021 pork output reached 53.0 MMT last year, just below the 53.4 MMT produced in 2017, prior to the African swine fever (ASF) outbreak that decimated the country’s hog herd. China slaughtered 671.3 million hogs in 2021, up 27% from a year earlier. The country’s hog herd totaled 449.2 million head at the end of December, up from 437.6 million head at the end of the previous quarter.

Hong Kong reported an African swine fever (ASF) discovery in a wild boar in the northern part of the territory, the World Organization for Animal Health (OIE) said on Monday. No domestic pig farms had been found affected by this case, it said.

USDA Secretary Tom Vilsack wrote: “Regarding your editorial ‘Carving Up Biden’s Inflation Beef’ (Jan. 8): This isn’t about covering higher costs or a lack of product, as the editorial claims. From beef to pork to poultry, the industry is dominated by a small number of massive companies that use their leverage to extract as much profit as possible — and it isn’t trickling down to producers.

“I’ve traveled the country and met with the hardworking ranchers and farmers that feed it. For example, I heard from producers in Iowa, where the beef packers are making $1,800 a head, while producers struggle. The challenge is not a lack of product; it is a lack of accessible options for producers to get their product to market at a fair price. This dynamic is harming Main Street, rural areas and Americans across the country.

“Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared with about 39 cents today. Hog farmers got 40 to 60 cents on each dollar spent 50 years ago, down to about 19 cents today.

“This isn’t a new problem, but the pandemic made it worse and provided a new opportunity for large companies to leverage higher profits. In July 2021, President Biden signed an executive order to promote competition in the U.S. economy. Immediately after, the Agriculture Department got to work seeking input from producers on how to add capacity and competitors to the meat-processing bottleneck. Last week we announced the Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain. We will not stand idle while these large companies use their market share to continue to overcharge consumers and set unfair prices for farmers and ranchers.”

China imported 654,000 MT of meat in December, bringing the yearly total for 2021 to 9.4 MMT, down 5.4% from 2020. China’s imports of beef jumped last year, but demand for pork fell sharply amid a surge in domestic supplies as the country’s hog sector rebuilt from the African swine fever outbreak that started in August 2019.

U.S. pork exports were 580 million pounds in November, more than 8 percent lower than a year ago, due largely to China’s reduced demand for U.S. pork. Shipments to China\Hong Kong totaled 47 million pounds, 72 percent lower than shipments in November 2021. As was the case in October, shipments to Mexico and other Western Hemisphere nations were particularly strong in November: exports to Mexico were 43 percent larger than a year earlier, shipments to Caribbean nations were 57 percent ahead of November 2021, and exports to Central and South American nations combined were 38 percent higher than a year ago. However, strong Western Hemisphere shipments were unable to offset the significant year-over-year shortfall in export volumes to China\Hong Kong.

The Pig Site

Tags: pork, prices, US, ASF, Hong Kong, hog, futures, ham