Lean hog futures bulls are having a good week, as they are keeping alive a nine-week-old price uptrend on the daily bar chart. The latest CME lean hog index quote is $84.22 as of Sept. 17. October hog futures are $2.17 below the index, which could prompt some selling pressure. October hog futures are likely to closely track the CME cash index in the coming days. Pork product movement remains strong suggesting better pork demand which is supporting both wholesale pork and the cash hog market.

Weekly USDA US pork export sales

Pork: Net US sales of 29,000 MT for 2024 were down 3 percent from the previous week, but up 3 percent from the prior 4-week average. Increases were primarily for Japan (7,900 MT, including decreases of 300 MT), Mexico (5,700 MT, including decreases of 500 MT), Colombia (3,300 MT, including decreases of 100 MT), Canada (3,200 MT, including decreases of 600 MT), and South Korea (1,900 MT, including decreases of 1,100 MT). Net sales of 100 MT for 2025 resulting in increases for Australia (200 MT), were offset by reductions for the Dominican Republic (100 MT). Exports of 31,400 MT were up 22 percent from the previous week and 12 percent from the prior 4-week average. The destinations were primarily to Mexico (12,600 MT), Japan (4,600 MT), China (3,800 MT), South Korea (2,400 MT), and Colombia (2,000 MT).

US port strike would impact livestock/meat

The majority of soybean and grain exports from the Gulf or East Coast would not be impacted by a potential dock workers’ strike amid negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX). Bulk grain export facilities typically operate with different labor arrangements, such as their own employees or different labor unions. However, the strike would impact exports such as soybeans, soymeal and other agricultural products exported via containers and indirectly affect grain producers through disruptions in the livestock industry. East and Gulf Coast ports accounted for 44% of U.S. waterborne pork exports and 29% of waterborne beef exports in the first half of this year. New York/New Jersey, Wilmington and Charleston were the largest East/Gulf ports for pork exports and Houston was the largest for beef.

China’s pork imports jump in August but still below year-ago

China imported 200,000 MT of pork in August, up sharply from only 90,000 MT in July but still 2.3% below year-ago. Through the first eight months of this year, China imported 1.5 MMT of pork, down 23.1% from the same period last year.

USDA annual report on European Union livestock industry

EU Beef and Pork Production Will Peak This Year

Swine and Pork – Similar to Beef, Pork Production Will Temporarily Recover in 2024.

Herd Size and Pig Crop: In 2023, EU piglet production reached a record low, while feed prices fell, and the demand for piglets rose. Record piglet prices tempted breeders to expand their sow stock during 2023. Because of the larger sow herd at the start of this year, the pig crop will rebound in 2024. This cycle is anticipated to reach a new record low in 2025.

Slaughter and Trade: In line with the pig crop trend, slaughter is forecast to increase by 0.9 percent this year and anticipated to fall by 1.7 percent next year. The trade of live swine plays a minor role in the total swine balance of EU.

Pork Production: This year, EU pork production is reinforced by higher weights at slaughter. EU pork production is forecast to increase by 2.0 in 2024 and decline by 1.7 in 2025. An additional volume of pork is mainly projected to be produced in Spain, destined for exports to EU and third country markets, and in Central Europe, most consumed domestically.

Pork Domestic Sales and Trade: EU Pork consumption is slightly increasing in Central and Southern Europe. However, both domestic consumption and exports will not be able to absorb the increased supply. The oversupply of pork is anticipated to increase competition and lower prices. These lower prices could improve the competitiveness of EU pork at the global market.

California's Proposition 12, which went into full effect on Jan. 1, 2024, has had several significant impacts

Implementation and enforcement. Proposition 12 requires farm owners, operators, and distributors of covered farm animals (egg-laying hens, commercial breeding pigs, and veal calves) to provide more humane living conditions. Key aspects of implementation include:

•  Covered entities must register with the California Department of Food and Agriculture and undergo on-site inspections.
• The law applies to both in-state and out-of-state entities selling products in California.
• Violations are considered misdemeanors with fines up to $1,000.
  
  Economic impact on consumers. The law has led to increased prices for affected animal products in California:
•  Egg prices have risen by an estimated $0.25 to $0.73 per dozen. This translates to an annual loss for consumers of $223 million to $664 million for eggs alone.
  
•  Pork prices are estimated to have increase dby about 25 cents per pound.
•  Overall, consumers are expected to pay $1.1 million more for regulated egg and pork products in the first year.
  
  Impact on producers. The law has created challenges and opportunities for producers:
  
•  Pork producers face significant costs to comply, with an estimated $3.5 million investment needed to retrofit pens on an average farm.
  
•  Some producers view Prop 12 as opening a new market, while others resist California dictating production methods.
  
•  The law may lead to consolidation in the pork industry and a potential shrinking of the national hog herd.
  
  Legal and political implications. Proposition 12 has faced legal challenges and sparked political debates:
  
  
• The U.S. Supreme Court upheld the law in May 2023, rejecting claims that it violated the dormant Commerce Clause.
•  Some industry groups continue to oppose the law, pushing for federal legislation to ban state-level confinement standards.
  
• The Biden administration has expressed concerns about potential "chaos" in the pork industry due to the law.

Broader impact. Proposition 12 has influenced animal welfare policies beyond California:

• Several other states, including Massachusetts, Arizona, Colorado, and Ohio, have passed similar laws addressing farm animal confinement.
  
• The law has sparked discussions about potential federal grants to help producers comply with the new standards.

China’s sow herd contracts 5.4%

China’s sow herd stood at 40.41 million head at the end of July, down 5.4% from last year, the agricultural ministry said.

US 9th Circuit weighs EPA's CAFO regulation approach in key legal battle

The US 9th Circuit Court heard arguments in a lawsuit filed by Food and Water Watch, seeking to compel the EPA to reconsider its denial of a 2017 petition for stricter water pollution regulations at concentrated animal feeding operations (CAFOs). Environmental groups challenge the EPA's 2023 decision to deny a petition for stricter regulations, arguing that the agency is neglecting its duty to control CAFO pollution. The EPA defends its stance, prioritizing further studies before regulatory changes. Agricultural industry groups, citing a 2005 court decision, support the EPA's current approach. The outcome could reshape CAFO regulation, with implications for environmental protection and the agricultural sector.

Of note: Senior Judge Jay Bybee called the situation “awkward,” suggesting the court may defer to the EPA’s ongoing evaluations. The lawsuit highlights concerns over the nearly 10,000 unpermitted CAFOs allegedly discharging pollutants into waterways. A decision may take up to a year.

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

October lean hog futures--$78.20 to 85.00 and with a sideways-higher bias

December soybean meal futures--$310.00 to $335.00, and with a sideways bias

December corn futures--$3.97 to $4.23 3/4 and a sideways bias

Latest analytical daily charts lean hog, soybean meal and corn futures