Our Christmas take:

Last week the US slaughtered 2.810 million market hogs. A huge kill, but one that reflects the appetite of packer’s to get hogs and have pork. Packer margin north of $50 is a big incentive for packers to kill everything they can. The positive is this huge volume of pork still has US pork cut-outs in the high 70’s showing strong pork demand despite the pork deluge.

Last week the National Daily Base Lean Weight Monday-Thursday was 211.04 lbs. The average the week before was 213.48 lbs. To us the significant weight drop indicates the weekly 2.8 million slaughter head number will drop significantly in January as predicted. We expect the projection of 2.5 million head is real. It’s the main reason February Lean Hog Futures are 71₵ lb. - $25-$30 head higher than current hog markets.

Last two weeks the small pig market has had a big price increase. USDA cash average early wean pigs last week were $46.60 up $12 from 2 weeks ago. 40 lb. cash average feeder pigs last week averaged $65.70 up $17 from two weeks ago.

The old adage of “who’s calling who” is a real indicator of small pig market. For several months sellers were calling buyers, now its buyers calling sellers.

We expect the small pig price will continue to appreciate as demand outstrips supply. $100 feeder pig will be seen before the dust settles.

A reflection of pig supply is producers last week contacting us to see if we were looking for empty barns. We aren’t and we weren’t. The pendulum swings.

Latest weekly US pork export report indicates the highest ever weekly export to China (15,280 mt). China is taking pork at record levels, we expect the tonnage to increase as in the new trade agreement China has committed to purchase more US Ag products.

Canada wasn’t in the China market from June-November. We expect it has, or will return to the pre June level of 30,000 tonnes a month.

There is no doubt USA-Canada will soon be doing at least combined 100,000 tonnes a month. That is equivalent to 1-1.1 million market hogs leaving the North American market. As JBS and Tyson get to Ractopamine free at the first of the year we wouldn’t be surprised if US exports to China reach 25,000 tonnes a week.

We have to get through holidays when plants are shuttered. When we look at the large decline in slaughter weights the last couple weeks we expect the holiday closures will work out okay. Current Lean Hog Futures indicate current cash hog prices (58₵) are the lowest expected for the next 18 months (lowest month, December 2020, 69.075)

2020 looks like a good year.

Have a Merry Christmas !