[Weds]: … in November U.S. exports of pork hit a record high and China import of pork also hit a record high. The Hightower Report says that if outside market forces were to calm down, and the U.S. /China relations continue to improve, buyers could turn quite active… [Tues]: National carcass base up 35 cents... Iowa-Minnesota carcass base up 32 cents... USDA reported carcass cutout values this afternoon fell $1.27... The Hightower Report said that the hog market is still relying on hopes of China being a more aggressive buyer of U.S. pork in the months ahead, which is supporting the market today...
Farm Commodity Newsletter/Iowa Farmer Today
Wed 1/8/2020 8:51 AM
Lean hogs - China's sow herd rose 2.2% in December over the previous month, Yu Kangzhen, the vice agriculture minister said, a sign of improving production. China's sow herd had declined by about 40% by last October. Despite a decline in confirmed outbreaks, the virus has spread countrywide and he added the chances of fresh outbreaks would increase with growing pig numbers and colder weather, Allendale said.
Further, in November U.S. exports of pork hit a record high and China import of pork also hit a record high. The Hightower Report says that if outside market forces were to calm down, and the U.S. /China relations continue to improve, buyers could turn quite active.
China pork demand high, beef packer demand lower
China will release 20,000 metric tons of frozen pork from its state reserves on Jan. 9, said the China Merchandise Reserve Management Center. This release comes in the run-up to the Lunar New Year holiday at the end of January, China's peak period for pork consumption, Allendale said. China has already released more than 100,000 metric tons of frozen pork from state reserves since last month.
The Hightower Report says, there is a little less demand from beef packers because their margins are currently lower.
Tue 1/7/2020 4:35 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base up 35 cents to $50.54/cwt.
National live was unchanged, staying at $40.50
Iowa-Minnesota carcass base up 32 cents to $50.68
USDA reported carcass cutout values this afternoon fell $1.27 to $73.49/cwt.
The February hog contract seems to have the right fundamentals in terms of supply and demand, but higher trade isn’t happening, “and traders are growing increasingly skeptical,” William Moore of Price Futures Group said. “The market is trading short-term fundamentals which week after week feature near-record pork production.”
Pork production “is expected to pull back soon,” according to Stewart-Peterson, which may bring some support. “While new buyers at these levels appear somewhat hard to come by, so are new sellers, especially given longer-term supply and demand setups.”
Cattle unable to build on Monday
Today’s trade saw “no follow-through to the upside” after yesterday’s strong day in cattle, The Hightower Report said. That run came as cash cattle was up $2 last week, but a “steady flow of cattle moving to the market” limited any further rally.
The Hightower Report said that the hog market is still relying on hopes of China being a more aggressive buyer of U.S. pork in the months ahead, which is supporting the market today.
Quiet day ahead of reports
Today marked a quiet day in the grain markets as most eased lower. Ami L. Heesch of CHS Hedging said China is not expected to increase their lower import tariff quotas on corn, wheat and rice, “despite indications of stepping up their overall purchases of U.S. ag goods.”
Only a couple of days left before Friday’s big USDA report and early estimates are coming out. Mike Zuzolo of Global Commodity Analytics said he expects the reports to be “all about the corn” in seeing if we can get a flat price rally.
His guess for corn ending stocks number to be below 1.5 bln bushels, which would be well below the 1.75 bln average trade guess. He guesses that soybeans will have an ending stocks number around 415 mln bushels, and wheat at 901 mln bushels.
Increased tensions from the Middle East and a stronger dollar put corn on the “defensive,” CHS Hedging said. “Favorable weather conditions across Brazil and Argentina provided additional pressure.”
Today’s losses came on the heels of weakness in energy prices as well, ADM Investor Services said. However, today finished with a “minimal loss” on the March contract on an inside trading day, they noted.
In his AgMaster report, William Moore of the Price Futures Group said South American weather is a factor on the market as “timely rains” have fallen which might bring a forecast for a record Brazil bean crop. “Believe it or not, bean prices are the same level as they were in 2009,” he said.
“Expectations for tightening ending stocks do not appear to be providing much in the way of support, while weakness in the energy markets plus a jump in the US dollar were seen as negative factors,” ADM Investor Services said.
Weakness is being found on the strong dollar, but short-covering helped the market recover near the close, Ami L. Heesch of CHS Hedging said.
“The Iran Crisis introduced serious supply/demand concerns, as Iraq is a large U.S. wheat customer,” William Moore of Price Futures Group said. The market was also overbought before the recent fall, but a China deal could help factors.