Pig outlook: Lean hog bulls struggle, China's sow herd, defining "free-range"

Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global pig news

1 April 2023

3 minute read

By: Jim Wyckoff

Lean hog futures bears have the technical advantage

The lean hog futures market continues in a price downtrend on the daily bar chart and the bears have the solid near-term technical advantage. The path of least resistance for prices remains sideways to lower in the near term. The latest CME lean hog index was down another 25 cents, marking the eighth consecutive daily decline. The weakening cash market is pressuring futures. Until the cash market finds its secondary low and starts a seasonal climb, buyer interest will remain limited in futures.

The USDA quarterly hogs and pigs report Thursday afternoon was expected to show the hog herd was fractionally bigger than last year as of March 1, according to a Reuters survey of analysts. All hogs and pigs were expected to be up 0.2%, with the market hog inventory 0.2% bigger and the breeding herd 0.5% larger than last year. The winter pig crop was also expected to be 1.2% larger than last year, while producers are likely to indicate they intend to marginally increase spring and summer farrowings.

Weekly USDA US pork export sales

Pork: Net sales of 30,400 MT for 2023 were down 20 percent from the previous week and 4 percent from the prior 4-week average. Increases were primarily for Mexico (14,600 MT, including decreases of 300 MT), Japan (4,100 MT, including decreases of 300 MT), Australia (2,200 MT), Canada (1,600 MT, including decreases of 500 MT), and South Korea (1,500 MT, including decreases of 600 MT). Exports of 32,400 MT were up 6 percent from the previous week and 7 percent from the prior 4-week average. The destinations were primarily to Mexico (12,800 MT), China (4,600 MT), Japan (4,600 MT), South Korea (3,300 MT), and Canada (1,700 MT).

USDA considering petition on ‘free range,’ ‘pasture-raised’ claims for meat, poultry

USDA’s Food Safety and Inspection Service (FSIS) is considering a petition from Perdue Farms that the agency “conduct rulemaking to define separate ‘free range’ and ‘pasture raised’ claims for meat and poultry products,” the agency said. Perdue is also asking FSIS to update guidance on claims related to living/raising conditions to ensure that they align with consumer expectations. The company submitted the petition March 16, which specifically calls on FSIS to “promulgate labeling regulations under the Poultry Products Inspection Act (PPIA) that remove ‘pasture-raised’ from claims considered synonymous with ‘free range’ and further amends its current Compliance Guideline such that ‘pasture-raised’ is separately and specifically defined.” Perdue argues that the two phrases need to have separate definitions as there is “substantial confusion” relative to what constitutes pasture raised. The company based its petition on consumer research, which it detailed in the petition for the rulemaking request.

China’s sow herd higher than target

China’s sow herd increased 1.7% in February compared with a year earlier to 43.4 million head, 5% more than the targeted capacity, state media reported. However, that was down 0.6% from January.