In this file:

 

·         Lots of moving parts for pork producers to navigate

·         High Hog Supplies and Uncertain Chinese Trade Add Volatility to Hog Markets

 

 

Lots of moving parts for pork producers to navigate

While this report will certainly go down as a surprise, it is a sigh of relief for pork producers as it projects an average price of $3.60 per bushel, down from the July report of $3.70.

 

Joseph Kerns, National Hog Farmer

Aug 12, 2019

 

Today’s USDA crop acreage report had the potential to be explosive and did not disappoint. Before I get into the numbers, let’s consider the framework and parameters from which the USDA was coming from with the data.

 

·         Dealing with what was almost assuredly record prevent plant acres and the incorporation of Farm Service Agency acreage data, which may not be consistent with the National Agricultural Statistics Service information

·         The change in objective yield data being pushed back to September in lieu of the traditional August effort containing ear and kernel counts — only farmer surveys and satellite data regressed against previous observations were used in this report

·         The USDA intentionally does not apply a weather bias for the balance of the growing season — no consideration of an early or late frost, no projections for temperatures or precipitation trends — even if the meteorological community was in complete agreement with a direction

·         A huge spread in crop maturity based on variation in planting dates and excess moisture in the spring

 

With that as backdrop, the USDA gave us another “wow” moment.

 

Corn yield was adjusted upward to 169.5 versus the July estimate of 166.0. NASS acres were 90 million planted, resulting in a total crop of nearly 14 million bushels. Both the planted acres and the yield were above the top end of the range of estimates published coming into this report This was way too much for the trade to absorb and resulted in corn trading limit-down soon after the report. The NASS information is contrasted with the FSA acreage numbers of 85 million acres and a record — by a factor of three times — prevent planting acres of over 11 million.

 

The apparent discrepancy between the two branches of the USDA is providing some conflict with those with a bullish bias who will be giving the “no way” explanation to this data. NASS went out of their way on this report to explain their methods and system, seemingly preempting the implied criticism of believability. As hard as it may be to swallow, I think we have to accept the reported acreage numbers as we continue to refine the yield numbers.

 

While this report will certainly go down as a surprise, it is a sigh of relief for pork producers as it projects an average price of $3.60 per bushel, down from the July report of $3.70.

 

Soybean acres were decreased a bit more than 3 million with yields consistent from the July report. This resulted in a rather blasé balance sheet relative to corn. Average bean price was left unchanged ($8.40) from the July projection.

 

On the revenue side, there is reason to be optimistic. Last week, the average price in China for hogs eclipsed the record values from 2016. In that year, Chinese pork production was reduced 5% which resulted in the record values. What happens when you lose 40% of your production? One province has witnessed price appreciation of nearly 50% in the past five weeks. In March, we got out in front of our skis a bit... 

 

more, including table 

https://www.nationalhogfarmer.com/marketing/lots-moving-parts-pork-producers-navigate

 

 

High Hog Supplies and Uncertain Chinese Trade Add Volatility to Hog Markets

 

Tyler Fulton - HAMS Marketing Services

Farmscape for August 13, 2019

 

HAMS Marketing Services says the trade situation with China continues to add a higher level of uncertainty to an already volatile North American hog market.

 

Live hog prices have remained extremely volatile throughout 2019.

 

Tyler Fulton, the Director of Risk Management with HAMS Marketing Services, says as the result of large U.S. hog supplies and increasing production, the value of any hogs not under contract is dropping rapidly but, on the pork side, the past two weeks or so have seen added support.

 

Clip-Tyler Fulton-HAMS Marketing Services:

 

That's led to a divergence in cash hog pricing because some producers are referencing that pork price that packers are selling for while others that don't have a secured contract, those values are dropping very sharply.

 

There's a great deal of uncertainty and it's a unique circumstance to see these markets moving in opposite directions.

 

I would say that most traders would view the Chinese situation as being the only way to avoid really significant losses in pig prices because of the abundant supply of hogs, particularly in the United States.

 

With these barriers to being able to capture those opportunities in China that relate to the losses due to African Swine Fever, we find ourselves in a position where we know fundamentally that there's opportunities there.

 

But there's just a huge amount of uncertainly as to when or if we as the North American hog industry are going to be able to capture that to be able to secure some of those extra sales because of that uncertainty on the trade agreements with China.

 

more

https://www.farmscape.com/f2ShowScript.aspx?i=27084&q=High+Hog+Supplies+and+Uncertain+Chinese+Trade+Add+Volatility+to+Hog+Markets