Pork Commentary

 

Jim Long, President-CEO, Genesus Inc.† - September 16th 2019

 

Wild Ride

Market Gyration Continues

Last Monday, December Lean Hog Futures were 59.72₵ lb. On Friday, 5 days later, they closed at 68.70₵ lb. Thatís a 9₵ lb. increase or about $20 per head in 5 days.

 

Itís a Wild Ride!

It seems our daily emotions go up and down with the lean hog futures. Since mid April, December lean hog futures have traded up and down in a 30₵ lb. range (89.8-58-77)

Itís nuts. One day things look good-next day- What the heck?

 

China

 

Itís all about China!

Daily, we watch the China market price? what are tariffs?

How much pork is being exported to China?

This past week the market benefited from some positive talk on USA-China trade negotiations. Also, from the China announcing they would not add more tariffs on U.S. pork.

 

Pork net sales to China last week of August were 10,880 metric tonnes, the highest since May. (our simple arithmetic: one tonne is 2200 lbs/200 lb carcasses = 11 hogs per tonne† meaning 10,880 metric tonnes ~ 120,000 hogs equivalency.)

 

________________________________________

 

U.S. Export Meat Federation

Year to date Accumulated Pork export
January 1 to September 5

 

Country

YTD

2017

YTD

 2018

YTD

2019

YOY

Total

733,193

758,128

871,288

15%

Australia

24,239

26,752

34,498

44%

Canada

51,816

56,113

55,485

-1%

China

49,984

20,999

183,409

773%

Columbia

23,713

34,563

36,923

7%

Hong Kong

42,992

34,564

32,144

-7%

Japan

128,009

126,277

100,191

-21%

Korea

82,425

117,727

102,965

-13%

Mexico

270,080

278,227

247,225

-11%

________________________________________

There have been 35 weeks since January 1 to September 5.

 

China has averaged just over 5,000 tonnes of imports per week from USA since January 1. Going forward thatís a number to watch- a bump to 10,000 tonnes per week is doubling sales.

 

What we need is to send 20,000 tonnes a week (240,000 hog equivalency).

 

With what is going on in China with total lack of pork supply, itís a reasonable number if tariffs could get lowered.

Last Week:

         China Average price 27.62 rmb - $1.76 U.S. lb. liveweight or 270-pound hog = $475 U.S. head.

         USA Average Price 53-54% lean 58.81 = 202 lb. carcass = 270 liveweight = $118 per head

 

Thatís a difference of $357 per head between China-USA last week . With that price spread youíd think there will be lots of buyers wanting Pork in China.

Other China News:

The China Ministry of Agriculture and Rural Affairs monitors 400 counties for pig production. In July the number of pig inventory fell by 9.4% month on month from June. Number of sows decreased by 8.9% from June.

The sow number decrease would between 2.5 - 3 million sows. The pig inventory down 30 million head approximately. This is in one month! ASF is far from under control in China.

The two largest pig companies in China are Wens and Muyuan. They released their sales for August.

Wens:

 

         1.173 million market hogs sold in August.

         A decrease of 34% from July. A decrease of 42.68% from August last year

 

Muyuan:

 

         711,000 market hogs sold in August.

         An increase 4.6% from July, but down 36.86% from August a year ago

The numbers from the two largest swine companies in China reflect in our opinion, the reality of Chinaís ASF issue

 

genesus.com