The pig traders’ perspective

The hog market has several key USDA data points during the next week that will have a big influence on the 2021 price outlook. Next week’s data starts with the 22 December monthly USDA Cold Storage Report, the next measure of domestic and export demand relative to slaughter levels.

The big report is the USDA Quarterly Hogs & Pigs Report on 23 December. That report will show downward adjustments to the September forecast but there is plenty of debate on whether producers used the fall rally to farrow more hogs than they said they would in September. From a technical chart perspective, the lean hog futures market bulls are continuing to show resilience amid choppy trading.

The next week’s likely high-low price trading ranges

February lean hog futures--$64.00 to $69.60, and with a sideways and choppy bias

March soybean meal futures--$385.00 to $400.00, and with a sideways-higher bias

March corn futures--$4.20 to $4.35, and a sideways-higher bias

Latest US Department of Agriculture (USDA) reports, and other news:

Solid US pork export sales in latest reporting week

USDA Thursday morning reported US pork net sales of 39,900 metric tonnes (MT) reported for 2020 were up 51 percent from the previous week and from the prior 4-week average.

Increases primarily for Mexico (22,400 MT, including decreases of 900 MT), China (11,600 MT, including decreases of 1,500 MT), Canada (1,900 MT, including decreases of 400 MT), Japan (1,700 MT, including decreases of 200 MT), and Colombia (800 MT, including decreases of 200 MT), were offset by reductions primarily for Australia (300 MT). For 2021, net sales of 44,300 MT were primarily for China (26,100 MT), Japan (8,500 MT), South Korea (4,600 MT), Colombia (1,500 MT), and Mexico (1,100 MT).

Exports of 42,000 MT were unchanged from the previous week, but up 8 percent from the prior 4-week average. The destinations were primarily to Mexico (14,600 MT), China (12,800 MT), Japan (4,500 MT), South Korea (3,400 MT), and Canada (1,800 MT).

China releases frozen pork leading up to major holidays

China released 16,000 MT of pork from its state reserves today to boost supplies leading up to its New Year and Spring Festival holidays, the commerce ministry reported. The ministry indicated more frozen pork would be released in due course.

USDA’s monthly livestock outlook

Following is USDA’s just released monthly livestock, dairy and poultry outlook.

Forecasts for export shares of US production for red meat, poultry, and eggs present a varied picture for 2020 and 2021. Beef’s export share of production for this year—10.7 percent—is lower than in 2019, due mostly to lower exports to Mexico.

Higher exports in 2021 are expected to increase beef’s export share to 11.3 percent. Pork’s export share of production is expected to increase from 22.9 percent in 2019 to 25.8 percent both this year and in 2021, due primarily to strong exports to China.

Broiler’s export share of production will likely tick up from 16.2 percent exported in 2019 to 16.5 percent this year. Strength in broiler exports this year is attributable to strong demand from Asia; the broiler export share is expected to be slightly lower at 16.4 percent in 2021. In 2020, turkey’s export share of production fell to 10.1 percent from 11.0 percent in 2019 due to a decline in demand from Mexico. Turkey exports are expected to trend upward next year, with 10.3 percent of production likely to be exported in 2021.

The export share of egg production is likely to finish 2020 at 3.7 percent—an increase from 3.5 percent in 2019—driven mainly by strong exports to Mexico as well as decreases in production. Shipments of eggs in 2021 are expected to moderate, with 3.6 percent of production likely to be exported.

Fourth-quarter pork and hog production

Fourth-quarter pork production is expected to be 7.5 billion pounds, about 1 percent above production a year ago. For the year in aggregate, 2020 pork production is likely to total 28.3 billion pounds, 2.4 percent greater than production last year.

Hog prices are expected to average $51 per cwt in the fourth quarter—more than 18 percent higher than a year ago—and about $43.25 for 2020, down almost 10 percent from 2019.

October exports were 13 percent higher than a year ago, supported by shipments to China\Hong Kong, Mexico, Japan, and Canada. Export growth is likely to slow to 7.35 billion pounds in 2021, up 0.4 percent from 7.32 billion pounds this year.

Read Jim Wyckoff's latest updates on the beef and dairy industry on The Cattle Site and see his analysis of the poultry market on The Poultry Site.