Pig outlook: Lean hog futures still strong, China pig price jumps higher
Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global pig news
12 August 2022
2 minute read
By: The pig traders’ perspective: October lean hog futures prices pushed to a new contract high this week as prices remain in a strong price uptrend on the daily bar chart. There are no early chart clues to suggest a market top is close at hand. Cash sources signal packers are pulling hogs forward to fill near-term slaughter runs. Any pulling forward of animals is not only price-supportive near-term but would somewhat reduce the seasonal buildup in hog numbers relative to expectations through the end of the year.
With the cash market defying seasonal tendencies to decline from late June highs illustrates demand strength. Hog supplies are providing few surprises, with weekly kills averaging near the anticipated 1% annual decline. Still, the fact that hog supplies and slaughter routinely increase significantly during the second half of August will very likely cause both cash and wholesale prices to turn downward through Labor Day.
US pork exports down in latest week
USDA Thursday reported US pork net sales of 21,500 MT for 2022 were down 31 percent from the previous week and 6 percent from the prior 4-week average. Increases primarily for Mexico (10,200 MT, including decreases of 500 MT), Japan (3,800 MT, including decreases of 300 MT), China (3,500 MT, including decreases of 200 MT), the Dominican Republic (1,400 MT), and Colombia (800 MT), were offset by reductions for South Korea (100 MT). Exports of 27,200 MT were up 4 percent from the previous week and 6 percent from the prior 4-week average. The destinations were primarily to Mexico (11,900 MT), China (4,800 MT), Japan (4,800 MT), Canada (1,700 MT), and South Korea (1,600 MT).
Chinese pork prices surge
China’s pork prices in July surged 25.6% from the previous month, with the strong gains attributed to production capacity cuts, farmers holding back pigs from market and a recovery in consumer demand. On an annual basis, Chinese pork prices jumped 20.2% last month.
Chinese meat imports inch up but still down from year-ago
China imported 643,000 MT of meat during July, up 40,000 MT (6.7%) from June but 207,000 MT (24.7%) below year-ago. China doesn’t break down the categories of meat imports in its preliminary data, but the sharp year-over-year reduction was due to slower pork demand. Through the first seven months of this year, China imported 4.1 MMT of meat, down 30.9% from the same period last year.
The next week’s likely high-low price trading ranges:
October lean hog futures--$95.00 to $105.00, and with a sideways-higher bias
September soybean meal futures--$430.00 to $468.10, and with a sideways bias
December corn futures--$5.87 1/2 to $6.36 1/2 and a sideways bias
Latest analytical daily charts lean hog, soybean meal and corn futures
