The view of the pig Lean hog future bull works to make the bottom of the market

Livestock analyst Jim Wyckoff shares global pig news

22 December 2023

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4 minutes of reading

Lean hog futures prices over the past three weeks have seen choppy trading at low price levels, beginning to suggest that a market bottom is in place. However, the bulls have a lot of work to do to confirm such and to suggest that the price increase can be sustained. The latest CME lean hog index is up 17 cents to $66.54 (as of December 19). It will also take a sustained increase in the price of the currency index to convince traders that there is a seasonal low.

U.S. pork and pork supplies are near annual highs and U.S. pork demand is uncertain with retailers likely completing all their purchases for planned year-end holiday features. Pre-report surveys for Friday’s USDA quarterly USDA Hogs & Pigs report show that analysts expect December’s US hog population and market hog numbers to fall 0.5% below year-ago levels, which there was a record large number of pigs kept per litter during the autumn quarter expected to fail due to the annual decrease in sows farrowing, thus producing a fall pig yield of 1.7% lower at the previous year’s level.

Weekly USDA US pork export sales

Pork: US net sales of 37,500 MT for 2023 were up 33 percent from last week and 48 percent from the prior 4-week average. Main increases for Mexico (15,900 MT, including a decrease of 200 MT), South Korea (7,000 MT, including a decrease of 2,400 MT), Canada (3,200 MT, including a decrease of 700 MT), Japan (3,000 MT, including a decrease of 1,200 MT ), and China (2,800 MT, including a decrease of 200 MT), offset by decreases in the Philippines (100 MT), Vietnam (100 MT), and Hong Kong (100 MT). Net sales of 25,500 MT for 2024 are mainly China (11,000 MT), Mexico (4,700 MT), South Korea (3,400 MT), Japan (2,600 MT), and Australia (900 MT). Exports of 40,500 MT – a marketing year high – were up 12 percent from last week and 26 percent from the previous 4-week average. The destinations are mainly Mexico (12,500 MT), South Korea (11,900 MT), Japan (3,900 MT), China (3,300 MT), and Canada (2,100 MT).

USDA sent two livestock market rules to OMB for review

USDA’s Agricultural Marketing Service has submitted two additional proposed rules regarding livestock market items to the Office of Management and Budget (OMB) for review. The first rule focuses on “Unfair practices, undue preferences, and harm to competition under the packer and stockyards law.” It aims to amend the regulations under the Packers and Stockyards Act to provide clarity about violations of the Act. In addition, it seeks to clarify the scope of the Act to determine actions or conduct that may violate the Act, even if there is no evidence of injury or likely to harm competition. USDA’s position is that the Act should primarily address cases involving competitive injury.

China’s Nov. that pork imported well from last year

China imported 90,000 MT of pork in November, unchanged from the previous month but 48.1% lower than last year. During the first 11 months of this year, China imported 1.46 MMT of pork, down 6.3% from the same period last year.

EPA proposes new US wastewater rules for meat and poultry processing plants

Such rules could lead to a reduction of 100 million pounds of water pollutants such as nitrogen and phosphorus each year. This marks the first update of effluent limitation guidelines for this industry in a generation. The proposed guidelines aim to achieve the highest possible reduction in pollution using proven technology, taking into account economic life. The EPA plans to open the proposed regulations for public comment following their publication in the Federal Register. As part of a court agreement, the EPA is obligated to finalize the standards by August 2025, following a lawsuit filed by the environmental law firm Earthjustice during the Trump administration when the EPA decided against update regulations.

Agri Stats: Data-driven meatpacker efficiency raises collusion concerns

Agri Stats, an Indiana-based company, is known for its data-driven approach to helping meatpackers optimize efficiency and maintain low prices. They collect and analyze vast amounts of data to provide insights and recommendations to their clients in the meat processing industry. However, the government has raised concerns that data provided by Agri Stats could enable companies to collude. According to a Wall Street Journal
profile, the company’s client list is huge, including up to 97% of the US poultry industry, worth around $60 billion, and 80% of pork processors. This profile highlights Agri Stats’ key role in beef industry operations and pricing strategies.

The next few weeks will likely be high and low prices in the trading range:

February lean hog futures– $65.80 to $74.00 and has a sideways bias

March soybean meal futures–$365.30 to $405.00, and has a sideways-lower bias

March corn futures–$4.50 to $4.85 and a sideways-lower bias

Latest analytical daily charts lean hog, soybean meal and corn futures

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