Pig outlook: Lean hog futures bulls remain in firm technical control

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

28 October 2022

3 minute read

By: Jim Wyckoff

North America

Asia

December lean hog futures remain in a steep price uptrend on the daily bar chart and bulls have the solid technical advantage. Futures remain supported by solid cash hog market fundamentals. Futures’ discount to the CME lean hog cash index has shrunk by about two-thirds since late September, suggesting increasingly bullish sentiment despite the seasonal weakness typically seen this time of year. Lower-than-normal hog weights underscore a bullish longer-term outlook. The shortage of hams and turkeys for the holiday season could support the hog/pork complex into mid-December, when grocers traditionally complete their ham buying for the holiday season.

USDA weekly export sales for US pork

Pork: Net sales of 20,300 MT for 2022 primarily for Mexico (16,900 MT, including decreases of 300 MT), China (5,600 MT, including decreases of 100 MT), South Korea (1,400 MT, including decreases of 200 MT), Colombia (900 MT, including decreases of 100 MT), and the Dominican Republic (800 MT), were offset by reductions for Australia (3,500 MT), Japan (2,600 MT), and Canada (400 MT). Exports of 30,700 MT were primarily to Mexico (14,300 MT), China (4,200 MT), Japan (3,500 MT), South Korea (2,500 MT), and Canada (2,100 MT).

USDA ups food price forecasts for 2022 and 2023

USDA raised their forecast for food price inflation in 2022 and 2023 from their September forecasts, now seeing 2022 prices for all food rising 9.5% to 10.5% (9% to 10% prior), food at home (grocery store) prices moving up 11% to 12% (10.5% to 11.5% prior) and food away from home (restaurant) prices rising 7% to 8% (6.5% to 7.5% prior). While USDA still sees smaller increases in 2023, they upped their forecasts to all food prices rising 3% to 4% (2.5% to 3.5% prior), grocery store prices increasing 2.5% to 3.5% (2% to 3% prior) and restaurant prices moving up 4% to 5% (3% to 4% prior).

China’s pork imports increased in September

China imported 150,000 MT of pork in September, up 10,000 MT (7.1%) from August but down 54,000 MT (26.5%) from last year. Through the first nine months of this year, China imported 1.22 MMT of pork, down 61.2% from the same period last year.

China’s Q3 pork production inches up

China’s third-quarter pork output totaled 12.11 MMT, up by less than 1% from the same period last year. China’s pork output totaled 41.5 MMT in the first nine months of the year, up 5.9% from last year. But the growth rate of China’s pork production has slowed recently since increasing every quarter year-on-year for the last two years, as some farmers reduced their breeding herds after months of low hog prices and high feed costs eroded profits. China’s pig herd totaled 443.94 million head at the end of September, up 1.4% from last year.

China encourages farmers to sell more pigs

China’s state planner has increased its coordination with large-scale hog farms to ensure stable supplies, as it tries to cool soaring prices in the world’s largest pork market. China’s largest hog producers have agreed to “undertake social responsibilities,” said the National Development and Reform Commission (NDRC) said. The companies will take the lead in ensuring supply and price stability in the market, release fattened hogs in a timely manner and speed up the slaughter pace when necessary, it added. Beijing has already issued several warnings to farmers urging them to stop holding back hogs from slaughter to wait for higher prices.