[Tues]: China has so far reported almost 100 cases of African swine fever and may need to start importing U.S. pork products soon. However, China pork prices have not moved much as of late, so it may take more time to build a sense of urgency to replace lost pork… Chinese Hog Farmers sharply cut 2018 profit estimates after fast-spreading African swine fever hit prices and demand for pork in the world's largest hog producing area… [Mon]: National carcass base rose 67 cents… Iowa-Minnesota carcass base rose 62 cents… USDA reported carcass cutout values this afternoon went up 86 cents…
Farm Commodity Newsletter/Iowa Farmer Today
Tue 1/8/2019 9:04 AM
Lean hogs - China has so far reported almost 100 cases of African swine fever and may need to start importing U.S. pork products soon. However, China pork prices have not moved much as of late, so it may take more time to build a sense of urgency to replace lost pork. Prices recovered from sharper losses early in the session, but the longer China waits to import U.S. pork, the more chance hog futures have to drift, said Stewart Peterson.
The U.S. pork industry has been expanding the breeding herd and growing since mid-2014. The rate of breeding herd expansion peaked in early 2018 at a 3.5 percent annual growth rate, according to Purdue University agricultural economist Chris Hurt.
“Financial losses and heightened uncertainties from trade tariffs have reduced that breeding herd expansion rate to 2.4 percent currently,” Hurt says. “Financial losses are expected to persist again in 2019, but will not be as large as last year’s trade-reduced prices. To get back to profits, the industry must secure more markets for U.S. pork or further reduce the rate of expansion.”
Chinese hog farmers cut profit estimates
Major Chinese Hog Farmers sharply cut 2018 profit estimates after fast-spreading African swine fever hit prices and demand for pork in the world's largest hog producing area. Wens Foodstuff Group Co Ltd. warned of 2018 net profit between 3.9 – 4.0 billion yuan (down 40% from 6.75 billion yuan last year), Allendale said.
Live Cattle & Feeder Futures rebounded sharply after five straight declining sessions on a round of strong bargain buying. Cattle futures also received support from news that the number of cattle offered for sale was down 6,200 from a week earlier, which could lend support to cash prices. Allendale said.
Mon 1/7/2019 4:30 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base rose 67 cents to $48.87/cwt.
National live went up 85 cents to $38.65
Iowa-Minnesota carcass base rose 62 cents to $49.90
USDA reported carcass cutout values this afternoon went up 86 cents at $70.56/cwt.
Hogs continued to fall today. Virginia McGathey of McGathey Commodities said that lower prices tend to be lower in the winter. With news about African Swine Fever still on everyone’s minds, the market failed to turn higher as traders are “fatigued,” she said.
“We still think there’s more room to work to the upside,” Oliver Sloup of Blue Line Futures said in an interview while markets were open today. “Last week’s rally, although we finished the week slightly firmer, it wasn’t the best price action we saw.” He noted that last week’s trend of finishing well off some of the highs may be a sign of more pressure to the market.
Cattle charge up Monday
Cattle’s higher close today “is a bullish technical development,” The Hightower Report said. “Buyers turned active on the break, and the market closed sharply higher on the day.”
Hogs, meanwhile, were quiet as traders wait for news from China. The quiet day caused prices to slip a little bit, but “the cash market seems to be stabilizing,” The Hightower Report said. However, there are concerns over the short-term hog supply.
China makes soybean purchase
China made its third notable U.S. soybean purchase in a month, Reuters is reporting. In the article, both traders said the purchase was at least three cargoes (180,000 tons), with one saying the “total was closer to 15 cargoes, or about 900,000 tons.”
President Trump plans to address the nation on National Security tomorrow, in the midst of the government shutdown.
Despite hitting a 2 ½ week high today, corn fell slightly today. “The market continues to find mild support from optimism over the U.S./China trade talks with traders anticipating China to be a of U.S. corn or ethanol if tariffs come down,” The Hightower Report said.
With negative U.S. ethanol margins, there are concerns demand for corn could start to fall, Steve Freed of ADM Investor Services said. He added, however, that there are higher U.S. beef and pork numbers which “could help corn feed use.”
Weekly inspections of corn finished below expectations this week, coming in at 501,541 tons.
Today was the first day of meetings between the U.S. and China trade delegates, and there were “positive remarks,” Steve Freed of ADM Investor Services said. There were also concerns about dry weather in Brazil, and wet weather in Argentina driving the market, he said.
“Soybeans are once again turning into a weather market,” Jack Scoville of the Price Futures Group said. He noted that South American weather has been “less than perfect this year” being wet in Argentina and southern Brazil and dry in western Parana and parts of Mato Grosso an Mato Grosso do Sul.
Soybean inspections finished within the estimate range today, coming in at 673,172 tons.
No news is troubling the wheat market, Virginia McGathey of McGathey Commodities said. “Without any information, it makes it difficult for us to move on where the direction of the wheat price is going to go,” she said. “We are also waiting for the winter wheat seeding reports, and that’s not going to be around for a while. We are flying blind right now.”
The wheat market fell slightly today “on technical selling and below expected wheat inspections,” CHS Hedging’s Michael Headlee said.
Wheat inspections came in at 260,134 tons, below the estimates of 350,000-600,000.