Analyst Jim Wyckoff stocks pig information from around the globe
24 November 2023
6 minute learn
February lean hog futures Wednesday dropped to a three-week low and costs have careened decrease this week, generating critical near-term technical injury to signify extra drawback worth force within the close to time period. Red meat cutout price posted a brand new for-the-move low this week, marking the bottom price since early June. The CME lean hog index fell some other 34 cents to $74.18, as of Nov. 20, a recent seasonal low. Money and wholesale basics proceed to weaken, which will have to proceed to weigh on money and futures costs within the close to time period. The tilt hog marketplace bulls can nonetheless level to typically excellent client call for for red meat, amid traditionally increased pork costs, which will have to stay a flooring underneath provide hog and red meat worth ranges. Hog slaughter will most likely upward push because the business will get again to paintings after the Thanksgiving vacation, with the weekly general almost definitely attaining its annual top right through the week finishing Dec. 16. Then again, wholesale ham call for could be most powerful in mid-December, forward of the vacations.
Hong Kong studies moment ASF case in a month
Hong Kong has ordered the culling of just about two thousand pigs after confirming a moment case of African swine fever (ASF) in a month, in line with a record from Reuters.
The Agriculture, Fisheries and Conservation Division (AFCD) on Thursday mentioned it deliberate to cull round 1,900 pigs from one herd on Nov. 25 after the virus was once found out at a neighborhood pig farm. The approved pig farm at Lau Fau Shan, within the rural Yuen Lengthy space close to the border with mainland China, examined certain for the ASF virus after group of workers took samples from 62 pigs.
“The prevailing case does no longer impact the operation of native slaughterhouses nor the entire provide of are living pigs,” the dep. spokesperson mentioned in a commentary, including that it’s going to stringently behavior cleansing and stay native pig farms underneath shut surveillance.
Previous this month, government ordered the culling of round 5,600 pigs after detecting an ASF outbreak at a farm in Yuen Lengthy. It was once no longer straight away transparent if the second one case was once discovered on the identical farm or a distinct one.
China’s sow herd declines for 10th consecutive month
Information from the Chinese language Ministry of Agriculture and Rural Affairs published that China’s sow herd has diminished to 42.1 million, down from 42.4 million in September, marking a 10th consecutive month of declines. Then again, state broadcaster CCTV indicated that the federal government nonetheless considers this degree to be upper than vital, as red meat intake has been less than expected, and productiveness has endured to upward push. This case has put force on hog costs in China, which at the moment are 42% less than they had been a yr in the past.
The ministry has mentioned its aim to “stabilize” the location and inspire a extra cheap degree of manufacturing. Then again, particular information about the coverage shifts that can be applied to reach this purpose have no longer been equipped.
USDA this week started reporting on choice of US hogs raised in compliance with animal confinement law
This reporting contains California’s Proposition 12 for the primary time. Prop 12 calls for that red meat produced on farms out of doors California supplies breeding sows with no less than 24 sq. ft of flooring area, the similar as required inside the state.
This new classification might be integrated within the Nationwide Weekly Direct Swine Non-Carcass Benefit Top rate record, in line with the Agricultural Advertising Provider (AMS). Till now, ACL-compliant hogs had been classified as “different,” which integrated hogs raised underneath more than a few systems that specialize in animal welfare, antibiotics, vitamin, genetics, meat high quality, procedure verification, sow housing, and weight. The amount of ACL-compliant hogs underneath federal cattle reporting regulations has grown sufficiently big to warrant a separate record, as according to AMS.
USDA mentioned this addition will supply precious knowledge to stakeholders within the red meat business, permitting them to make knowledgeable choices associated with ACL-compliant hogs. The Nationwide Red meat Manufacturers Council has been concerned about advocating for this reporting and has stayed engaged with the USDA’s Agricultural Advertising Provider right through the method. California has set Jan. 1 because the compliance date for Prop 12.
How China’s African swine fever outbreaks affected international red meat markets
Animal illness outbreaks may cause sudden adjustments in provide and insist for meat and different cattle merchandise. Those adjustments can lead to worth fluctua[1]tions and disruptions in overseas industry that create uncertainty in global markets. Sicknesses that unfold throughout nationwide limitations and outcome within the culling of huge numbers of animals in main generating international locations are particularly disruptive.
That is what took place when African swine fever (ASF) unfold from Europe to China in 2018—one of the most greatest animal illness incidents ever. The outbreak diminished China’s red meat provide, and Chinese language red meat costs greater than doubled to achieve file ranges. As China accounts for just about part of the red meat produced and ate up on the planet, this record investigates the level to which China’s diminished red meat provide affected pork-exporting international locations.
What Did the Find out about In finding? The ASF virus moved from Europe to China in August 2018, then unfold impulsively right through the rustic. The virus impacted China’s red meat provide greater than indicated by way of the choice of formally reported outbreaks.
Following China’s first ASF instances, its swine herd went via a 30-month cycle of decline and restoration from the 3rd quarter of 2018 (Q3) to 2021 (Q1).
China misplaced an estimated 27.9 million metric lots of its red meat manufacturing right through the 30-month cycle. China imported a file quantity of red meat right through the ones months, however the imports changed handiest one-fifth of misplaced manufacturing. Thus, China skilled shortfalls in red meat provides for roughly 18 months, concentrated right through the second one part of 2019 and maximum of 2020.
Will increase in red meat costs lagged the unfold of the illness. Red meat costs in China greater than doubled, with lots of the building up going on a few yr after the preliminary outbreaks. Red meat costs remained at a excessive degree for 14 months after which fell impulsively right through 2021. Red meat costs returned to close their pre-ASF degree about 38 months after the primary outbreaks.
Red meat exports to China surged right through 2019–20. China accounted for 45 p.c of worldwide red meat imports in 2020.
A complete of 31 international locations exported red meat to China, however the Ecu Union accounted for 58 p.c of the exports. America was once the second-leading red meat exporter to China, with a fifteen p.c proportion, regardless of industry tensions that coincided with China’s ASF outbreaks.
Throughout the 14-month top in China’s import call for, the proportion of red meat exported to China larger for most sensible pork-exporting international locations. Gross sales of upper price cuts grew quickest.
Affects on red meat markets out of doors of China had been somewhat modest. As an example, will increase in red meat costs in 3 main red meat exporting international locations (the US, Germany, and Spain) had been somewhat transient and far smaller in magnitude than worth will increase in China.
Volatility in China’s red meat marketplace is an ongoing supply of uncertainty for exporters regardless of the rebound in China’s manufacturing.
The following week’s most likely high-low worth buying and selling levels:
February lean hog futures–$69.00 to $75.00 and with a sideways-lower bias
March soybean meal futures–$415.00 to $450.00, and with a sideways bias
March corn futures–$4.76 1/2 to $5.00 and a sideways bias
Newest analytical day-to-day charts lean hog, soybean meal and corn futures
