Pig outlook: futures market in solid price uptrend as traders expect increasing demand in coming months
US pork exports are up year on year and China seeks to stabilise domestic pork prices.
by Jim Wyckoff, The Pig Site
8 January 2021
The pig traders’ perspective
Two weeks of sharply reduced holiday production have cleared the US pipeline. Wednesday’s hog slaughter came in a 495,000 versus 472,000 last week and 495,000 at this time a year ago.
This week’s product market action has signalled stronger underlying demand among retailers on price breaks, despite the post-holiday season typically being a fairly lacklustre demand period.
Rallying Chinese hog and pork markets, tight US cold storage stocks, a depleted fresh pork pipeline, increased cost of production and technical momentum all remain supportive and will limit the downside in lean hog futures.
Average US hog weights in the Iowa/southern Minnesota market jumped 3.3 lbs the week ending 2 January, to 291.6 lbs, with weights now 2.7 lbs above year-ago. Elevated weights have kept a damper on cash prices.
The pork cut-out value should be supported as US consumers are expected to use some of their stimulus money to refill freezers with meat.
The next week’s likely high-low price trading ranges
April lean hog futures--$72.00 to $75.30, and with a sideways-higher bias
March soybean meal futures--$420.00 to $440.00, and with a sideways-higher bias
March corn futures--$4.80 to $5.15, and a sideways-higher bias
Latest USDA reports
US pork sales continue to slide
The weekly USDA report on the morning of 7 January showed US pork net sales reductions of 8,600 metric tonnes (MT) for 2020, resulting in increases for Mexico (3,500 MT) and South Korea (500 MT), were more than offset by reductions primarily for China (11,300 MT) and Japan (700 MT).
Outstanding sales on 31 December 31 totalled 158,000 MT and were carried over to 2021. Exports of 26,700 MT were primarily to China (9,400 MT), Mexico (7,000 MT), Japan (3,500 MT), South Korea (1,700 MT), and Australia (1,100 MT).
Accumulated exports for 2020 totalled 1,938,000 MT, up 16 percent from the 1,624,000 MT exported in 2019.
The latest news from China
Demand for plant-based meat rising in China ...
China temporarily bans pork from another Brazilian plant ...
China to auction more pork reserves this week ...
more, including links