Pig outlook: Bears make big downside push, but now exhausted

8 October 2022

3 minute read

By: Jim Wyckoff

The pig traders’ perspective: December lean hog futures this week plunged to a 10-month low. However, prices have rebounded well up from this week’s low, which suggests the bears are exhausted and that a market bottom is likely in place. The CME lean hog index is down 51 cents to $92.93 (as of Oct. 4). The index has fallen $29.32 since the first week of August and is showing no signs of letting up as packer margins are in the red and supplies are building seasonally. Expectations for a seasonal increase in supplies continue to weigh on futures, but the ongoing herd contraction shown in USDA’s Hogs & Pigs update last week and an outlook for tighter supplies in 2023 strongly suggest the market is overdone on the downside.

Weekly USDA pork export sales

Pork: Net sales of 34,300 MT for 2022 primarily for Mexico (16,800 MT, including decreases of 200 MT), China (10,100 MT, including decreases of 200 MT), Canada (1,900 MT, including decreases of 400 MT), South Korea (1,600 MT, including decreases of 200 MT), and the Dominican Republic (1,200 MT), were offset by reductions for Australia (100 MT). Exports of 29,700 MT were primarily to Mexico (13,500 MT), China (5,000 MT), Japan (3,400 MT), Canada (1,700 MT), and South Korea (1,700 MT).

USDA releasing aid for farm, meatpacking workers

USDA announced that 15 groups will get $670 million in funds to farm and meatpacking workers that were negatively impacted during the pandemic, incurring expenses via the outbreak as they were deemed essential workers. The funds would amount to $600 per person and start in the fall, USDA said. $20 million was also earmarked for a pilot program that would recognize the efforts of grocery workers. The aim is to defray some of the costs incurred by workers relative to personal protective equipment, child care, and expenses for testing and quarantining. “Please note that payments are not yet available and each organization may have application periods that begin at different times,” said USDA’s Agricultural Marketing Service. The largest grant, $141.7 million, was awarded to UFCW Charity Foundation to assist farm, grocery and meatpacking workers. The UFW Foundation received $97.8 million, the second-largest grant, followed by $57.4 million to National Migrant and Seasonal Head Start Association.

JBS to shutter US plant-based foods business

JBS announced it would be closing Planterra Foods, its U.S. plant-based foods business, but will continue its efforts in other markets relative to plant-based foods. “JBS USA has made the decision to discontinue operations in its U.S.-based Planterra business unit,” JBS USA said in a statement. “We continue to believe in the potential of plant-based options for consumers and remain committed to the alternative-protein market.” The company launched its Ozo brand in 2020, but sales have failed to live up to expectations. “JBS will focus its efforts on its plant-based operations in Brazil and Europe, which continue to gain market share and expand their respective customer bases,” the firm said.

Bullish USDA hogs and pigs report

Every category in last week’s USDA’s Hogs & Pigs Reports was under the average pre-report trade estimates, which should trigger corrective buying in lean hog futures. USDA estimated the U.S. hog herd at 73.8 million head as of Sept. 1, down 1.1 million head (1.4%) from year-ago. The breeding herd at 6.152 million head declined 38,000 head (0.6%) from year-ago, while the marketing herd at 67.648 million head fell 1.029 million head (1.5%). All three categories were the smallest inventories since 2017.