In this file:

 

·         Has the great pork market of China finally been caught?

Packer capacity utilization has hold on hog prices.

 

·         Chinese buying drives record U.S. pork exports in November

“They just have a terrific need,” said Bob Brown, an independent U.S. livestock market analyst. “They’re needing to take it when they can find it.”

 

 

Has the great pork market of China finally been caught?

Packer capacity utilization has hold on hog prices.

 

Steve Meyer, National Hog Farmer 

Jan 13, 2020

 

Our friend Brett Stuart of Global Agritrends has stated that "China will always be our next great market." His implication, of course, is that China's 1.3 billion consumers and their pork-loving nature would be that pot of gold at the end of the rainbow that just keeps moving as we get closer to it. And I agreed with him every time he said it, so I am not being critical of his somewhat dour outlook.

 

But guess what? It appears that the dog has finally caught the car and we all may be wondering what to do with it.

 

November pork shipments to China (156.6 million pounds, carcass weight equivalent) exceeded those to Mexico by 27.8 million pounds. As can be seen in Figure 1, this isn't the first such occurrence, but the magnitude of the difference and the underlying circumstances are far different this time. We may finally be onto something big here. November shipments to China/Hong Kong (with those to Hong Kong being miniscule at this point) were up 66% from last year. Year-to-date China/Hong Kong exports are up 122% from 2018.

 

The big month for China resulted in far and away the largest month ever for U.S. pork exports, breaking the previous record (set in April 2018) by 14%. And to put 2019 in context: There have been 20 months in history in which the U.S. pork industry has exported 500 million pounds or more. Eight of them were in 2019 and December will likely make that count nine out of 21.

 

Total U.S. pork exports were 19.6% larger than last year in November. Year-to-date shipments are now up 5.5% and will set another record this year, breaking the record of 2018 which broke the record of 2017.

 

Just in case you are missing my message: I think exports have been exceptionally good and a major positive story for the U.S. pork industry. Even if they are less than some people's pie-in-the-sky expectations.

 

So why did Iowa-Minnesota negotiated hogs have an average base price of only $42.96 in November, and national negotiated net prices average only $46.52?

 

Answer: Packing capacity utilization. Figure 2 shows clearly that we severely challenged 5.4-day-per-week slaughter capacity after Nov. 1. And the true situation is even worse than what Figure 2 portrays for two reasons. First, the Prestage Foods plant in Wright County, Iowa, is in that 2.755 million head capacity at a full 10,000 head per day and it has not reached that level yet. The Prestage plant ran near 8,000 head per day in recent weeks, reducing "actual" capacity from "nameplate" capacity.

 

Second — and more important — packers' normal response to huge margins and lots of pigs is to add Saturday shifts every week every place they can. While some Saturdays saw big slaughter totals, they were not a "full court press" to handle the extra supply. I think the reason is the short labor supply. Plants may have enough labor, but they certainly don't want to run anyone off by working them several Saturdays in a row. So the normal ability to work above my 5.4 days per week capacity has not been present.

 

The other utilization factor, of course, is pig supplies and they have been plenty big. The peak was 2.825 million the week of Dec. 18 but last week's total of 2.713 million was still well above our computed hog availability of 2.573 million head. The average weight of producer-sold barrows and gilts has risen both weeks this year and was up more than 2 pounds per head versus both last year and the week of Christmas, suggesting that producers are not yet current in their marketings.

 

So why this post-mortem on the holiday hog market? Look at the red smooth line in Figure 2 that represents our forecast for weekly slaughter in 2020. The numbers behind that line for now through October are pretty well set. Pigs are on the ground to fill slaughter totals through June. The sows that will produce July through October slaughter are bred. The only thing that will significantly impact those numbers would be, I think, a major health break that would kill substantial amounts of pigs. The University of Minnesota's Bob Morrison Swine Health Monitoring Project has found no evidence of a problem of that magnitude for either porcine reproductive and respiratory syndrome or porcine epidemic diarrhea virus — yet. It could still happen, but the production year is off to a great start from the disease standpoint.

 

You can see that slaughter this past fall looks like child's play compared to what the numbers are telling us for 2020. A larger breeding herd (that is still growing), farrowings that we believe will be larger than USDA's chronically under-estimated levels, continued growth in litter size, and, at least for now, a good health situation all add up to slaughter totals above the 5.4 days per week capacity for the entire fourth quarter.

 

There will be little help on the capacity side...

 

more, including charts [2]  

https://www.nationalhogfarmer.com/marketing/has-great-pork-market-china-finally-been-caught

 

 

LIVESTOCK-Chinese buying drives record U.S. pork exports in November

 

Tom Polansek, Reuters  

January 8, 2020

 

CHICAGO, Jan 8 (Reuters) - U.S. pork exports in November surged to a record high for any month, according to new government data, driven by a fatal pig disease that is stoking a meat shortage in China.

 

The shipments fueled expectations for more big sales to China, although U.S. hog futures slumped on Wednesday.

 

China, the world’s largest pork consumer, needs to increase imports after its hog herd shrunk by about half because of an outbreak of African swine fever. The losses have pushed Chinese pork prices to record highs and roiled global meat markets. China has also increased imports from Europe and Brazil.

 

“They just have a terrific need,” said Bob Brown, an independent U.S. livestock market analyst. “They’re needing to take it when they can find it.”

 

Traders will review weekly U.S. export sales data on Friday, one day later than usual because of a winter storm in Washington.

 

In November, total pork exports reached 259,814 tonnes, up 26% from a year earlier and 11% above the previous high set in July 2019, according to U.S. Department of Agriculture data. Sales to China soared 589% from a year ago to 78,776 tonnes, about 35% of which were frozen carcasses. For January through November, exports to China jumped 134% to 472,811 tonnes, the data show.

 

“The surge in pork shipments to China will capture most of the headlines this month,” said Dan Halstrom, president of the industry group U.S. Meat Export Federation.

 

China maintains retaliatory tariffs on imports of U.S. pork, imposed in the U.S.-China trade war, giving an advantage to suppliers in Europe and South America. Still, analysts expect U.S. exports to rise further in 2020 because of China’s shortfall from African swine fever.

 

U.S. President Donald Trump has said a so-called Phase 1 trade deal with Beijing would be signed on Jan. 15. It includes a commitment by China to buy more American agricultural products...

 

more

https://www.reuters.com/article/usa-livestock/livestock-chinese-buying-drives-record-u-s-pork-exports-in-november-idUSL1N29D24N