It’s been a chaotic year with dramatic ups and downs. It’s stressful. It’s baffling and not necessarily logical the chaos that has been happening. For example, August Chicago lean hog futures closed Friday at 76.27 but 53-54 percent National Price on August 1st was 83.69¢ lb. Of note a year ago 53-54 percent lean hog were 67.21¢ lb. ($30 per head lower) To us what pork cut-outs and cash prices reflect the market place of supply-demand. Lean Hog Futures not so much. As my late friend Doug Maus used to say “Chicago is Las Vegas with no rules.”

USDA pork cut-outs closed Friday at $86.64.

The lean hog futures got hit last week like most of the US stock market by the announcement of new tariffs on China that could commence September 1st. In the hog sector the ability to send pork to China is the big question hanging over the market. The US is already facing almost 70 percent tariff on pork.

Rabobank

Last week Rabobank the world’s largest agricultural lender released a report estimating that already 40 percent of China’s hog herd has been lost due to ASF related issues.

• Rabobank estimates China herd could be half by end of 2019
• Rabobank speculates China herd may take 5 years to recover

Rabobank numbers are in line with what we have been reporting. China’s hog and pork production will continue to fall over the next 12 months. China’s hog prices will continue to increase. The great sucking sound we will hear is the pork and other meats being sent to China from around the world. The real question is how much from USA-Canada? Market cost and access matters!

Other Observations

• Much talk in US about soybean to China. How many soybeans does China need if they have 200-300 million fewer hogs to feed?
• Corn same thing 200-300 million fewer China hogs certainly will cut corn needs.
• At NPIC meeting a speaker spoke about corn ethanol usage flattening. That the push to electric and hybrid vehicles will hit corn ethanol demand hard. Made us think what is corn ethanol’s future? If not in vehicles where? Could be game changes over the next decade.
• Another speaker at NPIC also pointed out getting ASF in North America not a given. Foot and Mouth and Classical Swine Fever have been around a long time and been kept out.

Beyond Reason

Richard Berman had an excellent article in the Washington Times last week on Beyond Meat – i.e. Beyond Burger contains almost twice as much fat and 50 percent less protein. It’s also higher in sodium and calories.

What Beyond Meat Investors Should Know

Pig Champ

Pig Champ is a leading swine record keeping system. 2018 has some interesting data from 375 farms. We compared the Pig Champ numbers to 66 Genesus Herds. When reading the data go horizontal, it’s ranking in each category. No doubt Genesus customers are getting better results than the Pig Champ Data base customers.

Washington D.C

My son Spencer and I spent some time in Washington D.C. last week. We have been together in the world’s main capitals London, Paris, Moscow and Beijing. Have to say Washington as a capital stands out with the scale, organization and buildings. The memorials, White House, Capital Hill, the National Mall, and free access to Smithsonian Institute buildings are a combination that leaves a big impression. It was noticeable how many languages we heard tourists speak visiting from around the world. If you ever get a chance to visit Washington D.C, it is time well spent.