Pig prospects: Lean pig futures bulls strive to build a market bottom

December 22, 2023

4 min read

Lean hog futures prices have been volatile at lower price levels over the past three weeks, which is starting to indicate that the market has bottomed. However, bulls still need to do more to confirm this and show that the upward price trend can continue. The latest CME Lean Hog ​​Index rose 17 cents to $66.54 (as of Dec. 19). It will also convince traders that seasonal lows are in place via continued price gains in the Cash Index.

U.S. hog and pork supplies are near annual highs, U.S. pork demand is uncertain and retailers may have completed all purchases for the year-end holiday season. A pre-report survey of USDA’s quarterly hog and hog reports on Friday showed analysts expect the U.S. hog population and commercial hog numbers to be down 0.5% in December from last year’s levels, with record high hog herds per litter expected in the fall quarter. Pig production will be 1.7% lower than the same period last year.

USDA weekly pork export sales

Pork: U.S. net sales in 2023 were 37,500 tons, an increase of 33% from the previous week and an average increase of 48% from the previous four weeks. The main countries that increased were Mexico (15,900 tons, including a decrease of 200 tons), South Korea (7,000 tons, including a decrease of 2,400 tons), Canada (3,200 tons, including a decrease of 700 tons), Japan (3,000 tons, including a decrease of 1,200 tons), and China (2,800 tonnes, including a decrease of 200 tonnes), offset by decreases in the Philippines (100 tonnes), Vietnam (100 tonnes) and Hong Kong (100 tonnes). Net sales in 2024 will be 25,500 tons, mainly to China (11,000 tons), Mexico (4,700 tons), South Korea (3,400 tons), Japan (2,600 tons) and Australia (900 tons). Export volume was 40,500 metric tons, a new sales year high, an increase of 12% from the previous week, and an average increase of 26% from the previous four weeks. The main destinations are Mexico (12,500 tons), South Korea (11,900 tons), Japan (3,900 tons), China (3,300 tons) and Canada (2,100 tons).

USDA sends two livestock market rules to OMB for review

USDA’s Agricultural Marketing Service has submitted two additional proposed rules on livestock marketing matters 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 Packers and Stockyards Act.” Its purpose is to amend the provisions of the Packers and Stockyards Act to clarify violations of the Act. Furthermore, it seeks to clarify the scope of the Act to identify actions or conduct that may breach the Act, even if there is no evidence of harm or potential harm to competition. USDA’s position is that the bill should primarily address cases involving harm to competition.

China’s pork imports fell sharply in November compared with the same period last year

In November, China imported 90,000 tons of pork, which was the same as the previous quarter but 48.1% lower than the same period last year. In the first 11 months of this year, China imported 1.46 MMT of pork, a year-on-year decrease of 6.3%.

EPA proposes new U.S. wastewater rules for meat and poultry processing plants

These rules could reduce water pollutants such as nitrogen and phosphorus by 100 million pounds per year. This marks the first update to the industry’s wastewater restriction guidance in a generation. The proposed guidelines are designed to minimize pollution taking into account economic feasibility and using proven technologies. The EPA plans to publicly solicit public comment after publishing the proposed rule in the Federal Register. As part of a court agreement, the EPA is obliged to finalize the standards by August 2025, after environmental law firm Earthjustice filed a lawsuit over the agency’s decision not to update the regulations during the Trump administration.

Ag Statistics: Data-driven meat processing efficiency raises collusion concerns

Agri Stats is an Indiana-based company known for its data-driven approach that helps meat processors optimize efficiency and keep prices low. They collect and analyze large amounts of data to provide insights and recommendations to customers in the meat processing industry. However, the government is concerned that data provided by the Agricultural Statistics Service could lead to corporate collusion.according to a wall street journal
It is understood that the company’s customer list is very large, including up to 97% of the U.S. chicken industry (worth approximately $60 billion) and 80% of pork processors. This briefing highlights the important role Agri Stats plays in meat industry operations and pricing strategies.

Possible high and low price trading ranges in the coming weeks:

February lean hog futures – $65.80 to $74.00, sideways trend

March soybean meal futures – US$365.30 to US$405.00, trading sideways lower

March corn futures -$4.50 to $4.85, trading sideways lower

Latest analysis of lean hogs, soybean meal and corn futures on daily charts