Pork Commentary, December 16, 2019
Jim Long, President-CEO, Genesus Inc.

Good for U.S. Pork Producers

Last Friday China and the United States agreed to a phase 1 trade deal with lots of details. The main point for ag is the China commitment to purchase $50 billion in agriculture products.

To us this means ramped up U.S. Pork sales for two main reasons;

  1. China has a pork shortfall due to ASF (they need pork). To live up to a $50 billion commitment China will need diversified Ag products (soybeans, chicken, beef and pork) to reach that target. Pork is a logical choice. This in itself could put U.S. Pork sales as a priority over other countries to meet the $50 billion commitment.
  2. To be blunt the U.S. has the ability with tariffs to ensure compliance of phase 1 agreement. Other countries pork supply might not be as prioritised in the coming months.

We expect that the Phase 1 will be supportive to U.S. hog markets now with upside potential.

To put in perspective in regards to U.S. pork exports to China;

  • The last 4 weeks of data shows about 54,000 tonnes exported. This is almost 3 times the level of 4 week pork exports to China averaged in the first 6 months of 2019.
  •  Year to date U.S. exports to China are 316,000 tonnes, up 1236% over 2018.
  • We expect as JBS and Tyson get Ractopamine free in January, that weekly exports to China could surpass 20,000 tonnes a week, equal to about 200,000 hogs in equivalency.
  • We expect Canada to return to the export levels it had prior to the June China ban. That would be another 10,000 tonnes a week to China.
  • Combined U.S. and Canada – 30,000 tonnes a week (300,000 hogs equivalency per week? Big number and would be approaching 15-20% of total U.S./Canada pork slaughter equivalency.

Other Observations:

  • Cash U.S. early weans and feeder pigs jumped $4.00 last week. Aug. Early weans $39.04,
  • Feeder pigs $52.89. Break-evens on feeder pigs are in the mid 60’s.
  • We would not be surprised to see cash pigs continue to climb higher.
  • It appears to us last week’s slaughter weights have begun to decrease. What to watch is weights relative to slaughter.
  • If kills stay up in numbers and weights decline, it tells us we are moving to lower hog supply. Likewise if weights hold but slaughter numbers decline it tells us the same thing.


We have all been waiting for a reality on China. It appears to be happening with pork exports at record levels and new trade agreement that appears to have commitment for China to purchase more U.S. pork.

Projected January weekly slaughter marketing’s down 300,000 head per week from recent weeks.

More demand-lower supply combined with pork cut-outs currently in 80’s, a recipe for rapid hog price appreciation. 

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This post was written by Genesus