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Jim Long Pork Commentary: US hog price makes strong move

Last week the average 53-54 percent lean market hog in USA went from 71.79 to 77.96¢ per lb, a 6¢ per lb increase, or $12.00 per head.

1 August 2019, at 10:57am

The market prices are certainly going in the right direction. We expect to see the average price in the 80’s by the end of this week. Nice to see the industry could use making some money.

At the end of last week, the average price from the next twelve months lean hog futures is 84¢ lb. A profitable scenario.

It’s not hard to see the increase in China hog prices. A 250 lb hog is now almost $120 per head higher than the end of January. Since the end of May $70 head higher. We expect the China hog price to continue to go up over the coming weeks. $1.50 US a lb is not out of the question. The $120 per head increase is obviously an indication of lower pork supply.

Other observations

  • We got some push back on our concern in last week’s commentary that gene editing could hurt pork demand. Some passionate readers don’t agree. They believe technology will trump consumer reluctance. Maybe, but we wouldn’t bet the farm on it. Just give our business to plant-based products?
  • More chlamydia in gilt stories last week. We're now hearing of gilts that are not only not breeding but being blind. Some experts speculate it could be more than just chlamydia; it appears there is little consensus on what solution other than maybe de-population. Some are speculating could be genetic. Whatever the case, getting blind gilts that don’t come into heat is a big problem. Not exactly the recipe for high production.
  • Wonder how China hog price can go. 10 June, 2016 China average price was 20.80 CNY/kg. That is $1.40 US liveweight a lb. Obviously China consumers have paid high prices for pork before.
  • We were in China’s Sichuan province in mid-May and at that time the province had seen little ASF. Since then the province that produced 67 million pigs in 2018 (half of US production) had hell break loose. Some estimated the pig inventory of Sichuan has declined 70 percent since May. The 19.06 CNY/kg ($1.28 US lb) national price has much upside.
  • US gross packer margins to the positive are next to non-existent. Business cycle is alive and well. Packers have gone from the best margins in their history to not having any fun. High profits expanded packer capacity beyond hog supply. Packer margin decrease has led to more money for producers.
  • Beyond Meat (fake meats) announced a loss in their second quarter of $9.4 million on sales of $67.3 million. Beyond Meat yesterday also saw its shares drop from last Friday’s stock value of $239.71 to $192.61 a drop of over 20 percent. Is Beyond Meat the bitcoin (fake money) of the fake meat industry? Also, yesterday some of the executives of Beyond Meat announced they were selling a significant number of shares? Why?
  • To put in context: despite all the media hype, Beyond Meats is weanie compared to Tyson Foods who did approximately $10 billion sales a quarter. Beyond Meats is of 1 percent in revenue of Tyson. Also, Tyson makes over $750 million a quarter while Beyond loses money. Time will tell what shareholders selling out at Beyond Meats sure indicates their great belief in the great Beyond. Below are some real good perspectives on fake meat. Send them to everyone you know.

wellness.consumerfreedom.com
Chemicals Lurking in Plant Based Meats

Summary

Cash hog market showing strength. Lean hog futures showing positive gains. China hog market highest price since 2016. We expect to see continued China price appreciation. Won’t be surprised to see highest hog price globally ever before dust settles.