why are lean hog prices falling

June lean hog futures: $75.62 to $80.35, and with a downside bias. Belly inventories this year are back to their five-year average, so the rally that we saw last year is unlikely. So that leaves supply, and it has been huge, not unexpectedly so, but huge nonetheless. We have sufficient packing capacity to handle expected hog supplies this fall, but hogs initially slotted for those two plants will have to find another outlet, tipping the supply-versus-needs balance further toward packers. Hog futures have pulled back 12 percent since reaching a five-year high last month on projections for China to ramp up pork imports as it struggles to contain cases of African swine fever. Export growth has taken about 1 percent of the growth while a higher population has accounted for 0.7 percent. Through March, which is the most recent data, U.S. pork muscle-cut exports were up 5.3 percent in volume and 8.3 percent in value from a year ago. The soft performance of chicken and beef demand adds support since those species have more exposure to foodservice demand. In the spring edition of Pork Checkoff Report magazine, I discussed how low production costs and the Lean Hogs futures market pointed to an average profit of $26 per head for low-cost producers in 2018. Chicago Mercantile Exchange December lean hogs futures slid 1.275 cents, to 66.375 cents/lb. Yet packer margins have been significantly. Traders have been hoping for increased U.S. sales to Chinese buyers after China and other Asian buyers banned imports of German pork in September because of deadly pig disease in wild boar. Real per capita expenditures (RPCE) for pork exceeded year-earlier levels in January, February and March, and for the year were up 2.4 percent. Chicago | Reuters — U.S. lean hog futures fell on Wednesday on weaker wholesale pork prices, while cattle futures advanced on steady beef demand, traders said. Read Jim Wyckoff's latest insights from the global hog market. Though questions abound about future U.S. trade relationships, that hasn’t had a huge impact on U.S. exports. Combining average cash prices for January through April and CME Lean Hogs futures prices for the rest of the year, it’s now $68.20, a decline of nearly $7/cwt or about $15/head. Lower variety meat exports took about $2 per head off total by-product values as computed by the Livestock Marketing Information Center. What happened? The US pork industry depends on export markets to consume extra supplies after American farmers expanded hog herds in recent years and meat companies built new processing plants. Technical selling added pressure on futures prices after lean hogs closed weaker on Tuesday, analysts said. Lean hog prices fall as US pork sales to China disappoint. tighter than last year, which has reduced the incentive to push plants to their fullest throughput rates. In February, the nine Lean Hogs futures contracts for 2018 averaged $75.18/cwt. The next week’s likely high-low price trading ranges. "We are seeing a slow ramping up of shipments - not to the degree that the market has been anticipating - but it is starting to unfold," said Arlan Suderman, chief commodities economist for US-based broker INTL FCStone. Daily harvest averaged 399,967 head, up 2.8 percent over last year. “Will Rogers once said that he was more concerned about the return of his principal than the return on his principal. China has reported more than 120 outbreaks of the deadly disease in all of its mainland provinces and regions, as well as Hainan Island and Hong Kong, since it was first detected in the country in early August 2018. Javascript must be enabled for the correct page display, Pork’s Role in Healthy Diet Takes Center Stage with Dietitians, Push to Increase Global Sales Includes Refined Target Markets, Global Consumer Research, Key Link to Foodservice Segment Top distributors team with Checkoff to help promote pork menuing, Par for Course, No Dull Moments in the Cards for 2019, Weekly Pork Price Summary, November 6, 2020, Weekly Pork Price Summary, October 30, 2020, Weekly Pork Price Summary, October 23, 2020, Weekly Pork Price Summary, October 16, 2020. As of late May, this is the highest since 2014 when the last effects of policy-driven ethanol production and the 2012 drought held average production costs above $71/cwt. January feeder cattle jumped 1.525 cents, to 129.95 cents/lb., and reached their highest price since Oct. 16. For ASF, Germany is the hot topic, but let's get a global ASF update from the US. Read the latest updates on the global hog market from Jim Wyckoff. But planting progress was impressive in May, and we will go into June in good shape. What happened? Belly prices $0.90 per pound lower than last year would take $14.40 off the cutout value – and hog prices – versus last year. The US Department of Agriculture (USDA) reported a net reduction of 100 metric tonnes in American pork export sales to China in the week ended 13 June. Historically, Lean Hogs reached an all time high of 133.80 in July of 2014. Higher weights added 0.8 percent to year-on-year production growth. That left 1.9 percent more pork for every person in the United States. Nine more case of the disease, African swine fever, have been confirmed in wild boars in the eastern German region of Brandenburg, Germany’s federal agriculture ministry said on Wednesday. Not eating out one week does not translate into eating out twice the next. — Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago. That’s bearish for hogs and most other agricultural markets. In fact, belly prices finally worked their way back above $1 per pound the week of May 18 and will likely peak at $1.20 to $1.30. Farms plant in Wright County, Iowa, might harvest a few pigs in 2018, but will not run significant volume until next year. US lean hog futures tumbled on Thursday (21 June) as American pork export sales to China continued to disappoint traders who have been expecting a surge of demand due to an outbreak of a fatal hog disease in China. The hog market is another matter. When seasonal slaughter reductions arrived in May 2017, bellies prices exploded to a record of more than $2.20 per pound, adding about $18/cwt to the cutout value and pushing cash hogs into the lower $90s. Delays in ramping up those plants, however, have meant that supplies relative to packer needs have remained fully sufficient. Anecdotal evidence from foodservice and retailers support that the disruptions did occur. U.S. livestock: Lean hogs fall on declining…. Shipments of US pork to China increased to 5,800 metric tonnes, though. Record-late snowfalls in northern and western growing areas provided challenges. Domestic demand also has been strong. Talk to your banker and marketing advisor now and develop a plan that protects what you have worked hard to earn. All Rights Reserved. On average, we harvested 11,159 more hogs every day from Jan. 1 through May 11. Know your costs. Now may be time for that mindset.”. cuts have been a clear winner so far in 2018. On Thursday, traders will review weekly U.S. export sales data for signs of improved demand from China, the world’s top pork consumer. The U.S. pork cutout, an indication of wholesale pork prices, fell by $4.31, to $84.52/cwt, according to the U.S. Department of Agriculture (all figures US$). US lean hog futures tumbled on Thursday (21 June) as American pork export sales to China continued to disappoint traders who have been expecting a surge of demand due to an outbreak of a fatal hog disease in China. This put pork buyers in the driver’s seat and pressured wholesale pork prices and pork cutout values, which in turn has kept a lid on packer bids for hogs. There is one caveat to pork’s strong demand story: Late-winter storms in the northeast disrupted food demand. In February, the nine Lean Hogs futures contracts for 2018 averaged $75.18/cwt. However, analysts and traders said they still expect an increase in Chinese demand toward the end of 2019 and in 2020 due to African swine fever. Lean Hogs decreased 6.73 USd/Lbs or 9.40% since the beginning of 2020, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Lean hog futures prices are lower than a month ago, but remain bullish. That’s a recipe for good yields. Some observers expected the same kind of big run for hogs this summer that we witnessed last year. Pork variety meat exports, which set a record in 2017, were down 14.8 percent in volume and 8.6 percent in value. The hog market is another matter. Packers seldom have had to scramble to find enough hogs to keep plants running at comfortable throughput levels. Most weather forecasts indicate slightly wetter and cooler conditions this summer. My production cost model now points to a break-even of $65.22/cwt, carcass, for low-cost producers in 2018, up from $61.79/cwt in February. Will Rogers once said that he was more concerned about the return of his principal than the return on his principal.

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