Jim Long Pork Commentary – March 26th, 2020

Jim Long, President-CEO, Genesus Inc.

Let’s Deal with some Positives

  • Last week U.S. 53-54% lean hogs increased from 58.47 to 61.78 – $6.00 plus a head.
  • Last week USDA pork cut-outs went from 69₵ to 80₵ lb. – $22.00 plus a head
  •  Latest U.S. weekly Pork Exports were 43,000 tonnes, down 4% from the previous week’s record number (China 15,580 MT). 
  •  U.S. Pork Exports continue to run almost double a year ago.

Summary

  • Cash Hogs up
  • U.S.D.A. pork cut-outs up
  • U.S. Pork Exports circling record levels
  • Pork Demand holding in face of Coronavirus challenge

Coronavirus (COVID-19) effect on Hog Markets

We picked some of the countries hit by Coronavirus and used the date of late January as the beginning of outbreaks.

Many of these countries already had high prices. Main point, it appears that demand has held as have already high prices.

Domestic demand for Pork has jumped

  • Retail stores have been in many instances stripped of meat due to a combination of restaurant closures, hoarding, and more home meals.
  • Saturday U.S. kill was 313,000 head, up from 184,000 a week ago, reflecting huge packer margin and demand for pork. 
  • Certainly, no sign Pork demand is slowing due to Coronavirus

Lean Hog Futures continue their gyrations

  • Getting more and more disconnected from the fundamentals of the market. 
  •  More and more we see Lean Hog Futures as a pox on our house. 
  • Every other swine market in the world functions without one.
  • Most if not all hog markets don’t have to deal with instability that it creates. 
  • Most if not all other global hog markets are more profitable for producers than the one with a lean hog future.

Jan-Feb 2019 China Publicly Traded Companies hog sales versus Jan-Feb 2020

China has several publicly traded companies that report their hog sales. Below is a comparison between Jan-Feb 2019 and Jan-Feb 2020.

  • Certainly fewer hogs marketed in general this Jan-Feb. We expect due to ASF and Coronavirus logistic issues. 
  • Last year on the first of February China’s price for market hogs was 12.23 rmb/kg.
    (82.61₵ U.S. Liveweight a lb.).
  • This year Feb. first, China’s price for market hogs was 36.43 rmb/kg
    ($2.38 U.S. liveweight a lb.)
  • China is certainly short of pork.

Summary

It appears unlike many commodities and products, the Coronavirus issue has not depressed hog prices if anything they have gotten stronger.

Toilet paper demand, Lysol demand, and Pork demand are some of the few things that can say demand is better in the Coronavirus crisis.

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This post was written by Genesus