Pig outlook — Lean hog futures bulls work to stabilize prices

Livestock analyst Jim Wyckoff reports on global pig news

20 April 2024

5 minute read

By: Jim Wyckoff

North America

Asia

The June lean hog futures market last week took a serious nose-dive. However, this week the bulls have stabilized the market and are keeping alive a price uptrend on the daily bar chart. The lean hog bulls do need to show fresh power soon to suggest the price uptrend can be extended in the coming weeks. Fundamentally, the latest CME lean hog index was up another 38 cents to $91.36 as of April 16. The index has surged $26.31 on the seasonal rally since the beginning of the year and is nearly $20.00 above last year at this time. Pork cutout has rallied $14.79 since the beginning of the year and is nearly $22.00 above last year. Wholesale pork prices generally strengthen seasonally into summer.

Weekly USDA US pork export sales report

Pork: Net US sales of 21,800 MT for 2024--a marketing-year low--were down 54 percent from the previous week and 47 percent from the prior 4-week average. Increases were primarily for Mexico (8,500 MT, including decreases of 300 MT), China (3,000 MT, including decreases of 100 MT), Japan (2,900 MT, including decreases of 200 MT), Colombia (1,400 MT, including decreases of 100 MT), and South Korea (1,200 MT, including decreases of 400 MT). Exports of 41,700 MT were up 18 percent from the previous week and 22 percent from the prior 4-week average. The destinations were primarily to Mexico (16,200 MT), Japan (6,500 MT), South Korea (5,600 MT), China (3,600 MT), and Canada (1,900 MT).

China’s Q1 pork production declines

China produced 15.83 MMT of pork during the first quarter of 2024, down 0.4% from the same period last year. That was the first annual decline in quarterly production since the second quarter of 2020. China slaughtered 194.6 million hogs during the first three months of the year, down 2.2% from last year. China’s hog herd declined 5.2% from last year to 408.5 million head at the end of March, while the sow herd fell 6.9% to 40.42 million head.

FSIS sets webinars on voluntary US-origin labeling

The Food Safety and Inspection Service (FSIS), a branch of USDA, has scheduled two webinars regarding the implementation of the "Voluntary Labeling of FSIS-Regulated Products with US-Origin Claims" final rule, which was issued in March. These webinars are set to take place on April 30 and May 15, and they will be conducted using the Teams platform. The purpose of these webinars is likely to provide guidance and information to stakeholders about the requirements and procedures associated with the voluntary labeling program. It's noteworthy that compliance with this voluntary program is slated to begin on Jan. 1, 2026, indicating a future timeline for when companies must adhere to the regulations outlined in the final rule.

China’s pork imports plunge in March

China imported 90,000 MT of pork in March, down 39.3% from last year. Through the first three months of this year, China imported 260,000 MT of pork, down 51.7% from the same period last year.

Chinese meat imports slow dramatically in Q1

China imported 578,000 MT of meat during March, down 11.5% from last year. For the first quarter of this year, China imported 1.68 MMT of meat, down 270,000 MT (13.8%) from the same period last year. China doesn’t break down meat imports by category in the preliminary data, but the decline is due to reduced pork arrivals.

USDA Livestock and Poultry: World Markets and Trade

Pork

Global production in 2024 is forecast 1 percent lower year over year to 115.6 million tons as lower production in China more than offsets increased production in the European Union, the United States, and Brazil. China pork production is forecast 3 percent lower to 56.0 million tons as persistently low prices in 2023 triggered industry consolidation. EU pork production is forecast 2 percent higher year over year to 21.2 million tons. High piglet and carcass prices incentivized producers to begin rebuilding the sow herd at the end of 2023 and will lead to a 2-percent higher pig crop in 2024. Additionally, cheaper feed prices are expected to improve sector profitability and increase hog weights. Brazil production is forecast to increase 4 percent to 4.6 million tons as producers continue to benefit from lower production costs. Brazil production is also expected to be supported by improving domestic demand and robust export demand as Brazil remains the lowest-cost supplier. Global exports are expected at 10.5 million tons in 2024, 4 percent higher year over year as increased shipments are expected for all major exporters including the United States, the EU, Brazil, and Canada.

EU exports are forecast to rise 3 percent as higher production and increased price competitiveness in the second half of the year are expected to provide opportunities for growth. EU exports are anticipated to make significant gains to the United States. Brazil shipments in 2024 are forecast 5 percent higher year over year, with particularly strong competitiveness to the Philippines, Chile, and Hong Kong. Canada exports are forecast up 1 percent, with modest export gains expected in Japan and South Korea, where Canada will compete with the United States for market share.

US production and exports: US pork production is forecast 3 percent higher year over year to 12.7 million tons as larger-than previously expected hog supplies are reflected in increased hog slaughter. US exports are forecast almost 8 percent higher in 2024 with meaningful gains to core markets, especially Mexico and Japan, as abundant supplies and strong export competitiveness position the United States for export growth. US exports will also look to build off of strong 2023 market share gains in South Korea and Australia.