Wednesday , May 12 2021

Prospects for pigs: Pig market bulls keep their foot on fuel

The perspective of the pig trader

The low hog pig market continued to climb this week, but the cash pig market is now pausing. Spot cash pig markets are starting to weaken, putting some pressure on futures premiums. However, losses in futures were limited as the value of pork rose from a solid $ 4.71 to $ 110.01 per hundred weight on Wednesday.

Chicago Department of Commerce buildings
The futures markets were strong this week, but the rally in the cash market paused

Future pig market premiums in cash suggest that the U.S. supply of pigs is unlikely to rise above demand. In the meantime, the prices of suckling pigs and gilded ones reached several-month highs, which indicates the possible additional liquidation of the herd.

More reports from China on the continued impact of African swine fever on a herd of pigs in China and the resulting opportunity provided by the US strengthens export hopes as the US looks forward to reopening and increasing demand in restaurants.

Trading exchanges with probably low prices next week

June lean pork future – 102.00 to 107.00 US dollars and with more lateral biases

May Soybean Futures – $ 410.00 to $ 433.20 and with a bias aside

May corn dates – $ 5.60 to $ 5.85 and bias aside

News from the American pork industry

Pork exports remain strong

The USDA on Thursday morning reported net sales of 61,000 metric tons (MT) of pork in the U.S. for 2021 – which was a marketing year – up 58% from the previous week and 43% from the previous week. previous four-week average.

The increases were primarily for China (29,700 MT, including reductions of 1,200 MT), Mexico (15,800 MT, including reductions of 500 MT), Japan (4,600 MT, including reductions of 200 MT), Canada (3,700 MT, including reductions of 400 MT) and Australia (2,200 MT, including reductions of 300 MT).

Foreign pork in the freezer
Pork exports rose dramatically this week, reaching the highest level in the marketing year

Exports of 40,400 MT increased by 5% compared to the previous week and 2% compared to the previous average of 4 weeks. The destinations were primarily China (11,900 MT), Mexico (9,900 MT), Japan (5,200 MT), South Korea (4,000 MT) and Colombia (1,800 MT).

USDA U.S. Refrigerator Report in February

Highlights from February 2021:

  • Total stocks of red meat in freezers increased by 3% compared to the previous month, but less by 12% compared to last year.
  • The supply of frozen pork is higher by 7% compared to the previous month, but by 24% compared to last year.
  • Pork belly stocks were up 22% from last month, but down 49% from last year.

Latest updates from Asia

China’s WH group says pig processing fell 46% by 2020 as ASF cuts inventories

The use of illegal African swine fever vaccines in China last year caused infections that reduced pig stocks and raised prices, said Ma Xiangjie, president of Henan Shuanghui Investment and Development, a domestic unit of the WH Group.

China’s largest processor WH Group said in a statement on earnings that pig processing fell by 46% in 2020 compared to the previous year due to narrow stocks.

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The company also said it imported 700,000 tons of meat in 2020, of which 70% comes from the United States. The processor expects an increase in pig production in 2021, but also commented that prices are likely to remain well above prices in foreign markets.

A gloved hand holding a syringe, and in the background are piglets
China is struggling to combat the use of illegal and unsafe vaccines against ASA

An analysis of the South Korean pork market shows that demand is still high

The USDA said in a recent report that while South Korea’s total demand for beef and pork remains high, imports of these products have fallen as a result of the global pandemic.

Restrictions related to COVID have limited the Korean hotel, restaurant and institutional sector in which imported meat is widely consumed. In contrast, the shift from the Korean market to domestic meals has boosted domestic meat retail.

In the pork sector, Korean small businesses continue to struggle with balancing production costs and suppressed pork prices. With improved market conditions expected in the second half of 2021, pork consumption in Korea is projected to recover moderately by the end of the year.

Agricultural news from the European Union

The European Commission is changing the rules on animal feed

The European Commission has presented a draft proposal that would allow the feeding of processed animal protein (PAP) from poultry to pigs, and pork PAP from poultry. As the vast majority of Member States accepted the proposal positively, EU industry experts believe that the proposal has a good chance of being approved in writing at a meeting in April or May.

Although the European Parliament, under scrutiny, must also vote on the proposal, it is not expected to block this proposal as the EU feed sector will regain an important source of high-quality protein, while at the same time recycling large amounts of animal waste, which fits into the objectives of the EU resolution strategy.

A person holding pig food in his hands while a piglet moves towards it
Allowing PAP in animal feed fits in with many of the goals set out in the Farm to Fork strategy

In response to the European BSE crisis, the EC adopted a regulation laying down rules for the prevention, control and eradication of certain transmissible spongiform encephalopathies, also known as the BSE regulation. The EC has banned the use of PAPs and meat-and-bone meal (MBM) in feed for farmed animals.

News from the meat industry from South America

Argentina has suspended 15 meat exporters for evading industrial regulations

This week, the Argentine Ministry of Agriculture announced that it had discovered that several meat export operations had undermined competitors and evaded taxes by failing to properly register their business with the state.

Therefore, the country suspended 15 meat exporters, which affected at least 40 MT shipments. The report did not name the companies involved. The ministry said in a statement that state prosecutors would soon begin preparing formal appeals.

Read Jim Wyckoff’s analysis of the global poultry market at Poultry settlement and check out news about the beef and dairy industry at Stock.

Jim Wyckoff

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