Our observations:

• There were we understand about 950 registered. The group was a good cross section of producers, packers, feed companies, genetic companies and trade groups.
• The NPIC was well organised. Everything is on time, the venue and facilities excellent. A testimony to Larry Graham who founded and set the bar for 21st century strategic forums that put on the NPIC.
• Two speakers Dr Frank Mithoehner and Rich Berman spoke on fake meat. Obviously as pork producers we don’t see as a group much upside to fake meat attempts at eroding our customer base. The below links are work done by Rick Berman’s business group. Please watch them.
  • wellness.consumerfreedom.com.
  • Chemicals lurking in plant-based meats.
• Several speakers spoke on African swine fever. To summarise best we don’t get it.
• The keynote speaker was Ken Sullivan, CEO Smithfield Foods. Smithfield is the world’s largest packer and hog producer. Mr Sullivan discussed Smithfield’s scope globally. There many brands. They are shipping carcasses to China. He explained that despite what many think, that Smithfield is not owned by the Chinese.

In last weeks commentary we wrote about our talk at NPIC. A day later Brett Stuart, founder of Global Agri-Trends, spoke on China’s market trend.

• China had 8-10 million tonnes of pork on storage. That is equivalent to 70 percent of the US annual pork production. This has been buffer to China’s pork prices rising rapidly. The storage amount was in Brett’s opinion four to six weeks of China’s pork consumption.
• The official China government statistics are year over year Market Inventory down 22.9 percent sows down 23.9 percent. Most market observers believe sow herd down 50 percent range.
• Some areas of China now $1.18 US lb liveweight. At that price even with tariff on US pork it starts to work to import.
• In 2017 China produced 40.9 million metric tonnes (weight equivalent). Brett expects a shortfall of 16.3 mmt. This number is similar to what we heard Rabobank say in a talk in China.

Bottom line huge shortfall – not enough chicken, beef, pork to cover. There is not enough export pork in the world to cover shortfall.

Our points

At NPIC we heard Chlamydia continues to have impact on industry.

• The sexual disease is causing gilts not coming into heat. Over 30,000 gilts in multiplication have been affected. This has cut supply (200,000 gilts?) Now we are hearing some current customers having supply cut off to look after priority accounts. Maybe there will be new strategy to gene edit Chlamydia away? PRRS isn’t a big issue when you have no pigs from lack of farrowings?

Hog prices in China starting to move higher.

• They were about 15rmb for several weeks ($1.00 US lb liveweight). Now they have jumped to $1.10-1.18. Since July 1 the average price in China has risen to 18 rmb/kg (1.18 US/lb). While the provinces of Liaoning, Tianjin, Fujan, Guandong broke 20 ($1.32 US liveweight a lb) Price is real. This tells us pork supply tightening.
• A few weeks ago we wrote that when we were in China, we were told that frozen stocks were going to be tested by government starting 1 July for ASF. If positive they were going to be burnt. We reported storage levels were being rapidly depleted. Jump to 1 July China’s hog price starts to rise. We expect cause and effect.

ASF continues to hit hard in China.

• Sichuan one of the largest producing provinces (80 million a year) had not had much ASF when we visited in May. Now there are major breaks. ASF has not been stopped. Liquidation continues.
• Several commodity brokers told us futures are low partially because institutional investors got burnt on the quick rise and fall of futures. We heard until China’s hog price and actual pork exports grow institutional investors believe much of anything.

At NPIC in the corridors the main subject was China and ASF.

• The industry wonders when US hog price will benefit from high prices – low supply China. Tariffs big issue, US hog producers are carrying brunt of tariff war. Spain’s price $50 per head higher since they can ship to China without punitive tariff. Billion-dollar question… When? We expect soon we will see increased exports. Watch Chinese hog price it has reached $1.30, we expect to continue to go higher $1.50 not out of question soon.