Pig outlook: Lean hog futures bulls still have the technical edge

23 September 2022

4 minute read

By: Jim Wyckoff

North America

Asia

The pig traders’ perspective: The pork cutout value fell $4.60 on Wednesday to $100.35 as belly prices plunged more than $19 and all cuts except butts weakened. The cutout value appears poised to drop below $100.00 for the first time since May 12 as packers are cutting prices to keep product moving through the pipeline amid reduced retailer interest. The CME lean hog index fell 6 cents to $98.36 (as of Sept. 19) and is expected to drop another 40 cents Thursday. December futures ended nearly $8 lower than nearby October, indicating traders expect a seasonal increase in supplies and slaughter to weigh on hog prices in coming weeks, with USDA’s quarterly Hogs and Pigs report Sept. 29 likely to be one key to market direction this fall. While fundamentals may be leaning bearish at present, the charts are still leaning bullish.

Weekly USDA pork export sales

Pork: Net sales of 29,000 MT for 2022 were primarily for Mexico (15,500 MT, including decreases of 600 MT), Canada (2,300 MT, including decreases of 500 MT), China (2,200 MT, including decreases of 200 MT), Japan (2,200 MT, including decreases of 200 MT), and South Korea (2,100 MT, including decreases of 100 MT). Exports of 26,500 MT were primarily to Mexico (12,500 MT), Japan (3,200 MT), China (3,100 MT), South Korea (2,200 MT), and Canada (1,700 MT).

China to sell more pork stocks

China will release another 14,400 MT of frozen pork from state-owned reserves on Sept. 23, continuing its recent sales onto the domestic market to ensure adequate supplies amid rising prices as the country heads into its extended holiday season. In total, China plans to sell around 200,000 MT of pork from state-owned reserves.

China pork imports rose in August

China imported 140,000 MT of pork in August, up 20,000 MT from July but still 50% less than last year. For the first eight months of the year, China imported 1.07 MMT of pork, down 63.6% from the same period last year.

US pork producers list industry priorities

The National Pork Producers Council (NPPC) held its fall Legislative Action Conference Wednesday and Thursday last week, meeting with their members of Congress to discuss pork industry priorities. Over the two-day event, NPPC said its producers asked lawmakers to:

Trade policy: Press the Biden administration to join the 11-nation Comprehensive and Progressive Trans-Pacific Partnership and to negotiate an Indo-Pacific Economic Framework trade deal that addresses market access for and non-tariff barriers to U.S. products.
Expand the H-2A visa program to year-round agricultural workers, including packing plant employees. Currently, the visa only allows for temporary, seasonal farm laborers.
Pass the “Beagle Brigade Act,” authorizing a training center for dogs that can detect animal and plant diseases and pests at the country’s points of entry. Only the Senate must approve the measure; the House passed the bill earlier this year. Producers also asked that the Bureau of Customs and Border Protection agricultural inspection program be fully funded.
Next farm bill: Fund in next farm bill the National Annual Vaccine and Veterinary Countermeasures Bank, the National Animal Health Laboratory Network, the National Animal Disease Preparedness and Response Program, and the National Veterinary Stockpile. Producers also asked for an increase in funds to help reduce the population of feral swine, which can carry foreign animal diseases.
Trade promotion: Reauthorize and fund — also through the farm bill — the Market Access and the Foreign Market Development programs to promote U.S. agricultural exports and authorize a USDA catastrophic risk insurance program to help mitigate risks for pork producers.

Chinese pork prices surge

China’s ag ministry says the price of pork in the country averaged 30.69 yuan ($4.43) per kilogram for the week ended Sept. 9, up 1.2% from the previous week and 69.4% higher than last year. China will release a record 200,000 MT of pork from state reserves this month to boost supplies and stabilize prices.