Pork export data show that export demand is down, especially to key countries, but domestic demand appears to be just fine.
A story for the National Hog Farmer by Kent Bang of Campeer Financial, said, “Pork prices at retail in the latest reports indicate that pork prices were higher year-over-year led by bacon prices at the highest price at retail since October of 2017.”
HOG SLAUGHTER UP
Over the past three weeks, US hog slaughter was dramatically higher than a year earlier, Bang said. In the first 14 weeks of 2019, harvest numbers averaged 4.0% more than the prior year.
That was followed by a sharp decline between April 8 and May 25, with harvest numbers up just 0.4% from the same period in 2018, he said. And with all the trade talk about China and retaliatory tariffs, it was hard to determine what effect, if any, this lowered supply was having on the markets.
Pork cutout prices from the USDA rose and fell slightly during the period and went against seasonal bullish trends, in spite of the lowered slaughter rates.
However, during the first three weeks of June, hog slaughter numbers were up by 7.2% from the 2018 period, yet hog markets remained steady, Bang pointed out.
Based on the latest Hogs and Pigs Summary, he said he would expect hog slaughter numbers from March through August to be 2.2% more than last year.
That all means the hog market is not being driven by supply, he said.
IT’S ALL ABOUT DEMAND
Despite the fact that pork production through April was record high and exports were down from the prior year, US pork disappearance was higher this year relative to the past, Bang said. Pork prices at retail in the latest USDA reports indicate that higher year-over-year pork prices were led by bacon, which was at the highest retail price since October 2017.
Simply put: US pork demand has been stronger, he said.
STILL WATCHING EXPORT DEMAND
With that being said, Bang still is watching pork export markets, hoping for improvements.
“The biggest market dynamic is clearly the outlook of pork exports to China and the rest of Asia,” Bang said.
He said his firm still believes exports to China and Asia will drive US pork and hog markets in the future and probably will increase cold storage supplies as sellers prepare for trade resolution and increased exports.
The timing of any increase in pork exports to China is uncertain since China apparently has increased its cold storage supplies as pigs are being marketed at less-than-normal slaughter weights, he said.
And, the presence of African Swine Fever in China likely will keep hog slaughter high, since farmers want to get as much return for their hogs as they can before ASF has a chance to decimate their herd.
CATTLE, BEEF RECAP
Cash cattle trading was reported this week at $110 per cwt on a live basis in the Plains down $2 to $4 from last week, and at $182 to $183 on a dressed basis, down $2 to $3.
The USDA choice cutout Thursday was down $0.87 per cwt at $220.72, while select was off $0.76 at $201.48. The choice/select spread narrowed to $19.24 from $19.35 with 89 loads of fabricated product sold into the spot market.
No contract delivery notices were served for the Jun live cattle futures contract Thursday.
The CME Feeder Cattle index for the seven days ended Wednesday was $132.99 per cwt, down $0.06 from the previous day. This compares with Thursday’s Aug contract settlement of $134.70, down $1.82.