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Jim Long Pork Commentary: Some good news

Last week the US hog industry got a sliver of good news

12 March 2019, at 1:26p.m.

April lean hog futures increased $4.15 lb. or about $9.00 per head. May gained $3.00 lb. It’s good to see the jump. Our industry has been hammered by negative margins for too long. Time will tell if the jump is just the beginning of stronger prices.

Observations

Last month’s USDA cold storage report shows 3 percent less pork in cold storage compared to a year ago. 562 million pounds compared to 580 million.

This is being interpreted as bullish as it indicates despite record pork production it is not backing up in storage. It’s getting sold!

The new Prestage plant in Iowa started harvesting last week. At some point should be 8,000 - 10,000 per day. Prestage owns a lot of hogs, they were being bought by other packers. Now those packers need to fill in these lost hogs. Demand enhances prices.

Last week we were in North Carolina. Heard firsthand the effects and costs of the legal challenges that hog producers are having initiated by predatory lawyers. Certainly it makes you realise it would be next to impossible for a new large production system being built anywhere in the USA when faced with the environmental challenges it would face.

On the human side in North Carolina we saw the devastation of last Septembers floods on so many homes. Where we live we get snow; sometimes seems a problem. After seeing the effects of the flood it makes you realise snow is not that big an issue.

A recent study in Denmark found 88 percent of swine production herds had MRSA. This is up from 3.5 percent in 2008. MRSA is now becoming a bigger issue in Europe. Importers of live swine from Denmark are getting increasingly aware of the MRSA level in that country and the risk implications.

MRSA – Emerging livestock – associated methicillin – resistant Staphlylocces aureus (MRSA) persist in livestock populations and represent a reservoir for transmission to humans.

Summary

Last week we saw strength in lean hog futures and USDA pork cut-outs. Good chance low prices for year are in. Continued price increases this week will be positive for future markets.