US futures market

Lean hog futures price action the past week has been sideways and choppy but the bears have the overall near-term technical advantage. The pork cutout value dropped $1.99 on Wednesday amid heavy losses in loins, picnics and hams. While the product market is struggling, the cash market continues to gradually firm, with the CME lean hog index up 4 cents to $79.93 (as of March 14). Lean hog futures have not been immune to the recent market turmoil. A rising U.S. dollar index and a volatile stock market have discouraged market participants from more risky, highly leveraged markets.

Weekly USDA pork export sales

Pork: Net US sales of 35,600 MT for 2023 were up 62 percent from the previous week, but down 5 percent from the prior 4-week average. Increases were primarily for Mexico (9,900 MT, including decreases of 300 MT), Japan (6,400 MT, including decreases of 200 MT), China (5,000 MT, including decreases of 100 MT), South Korea (4,100 MT, including decreases of 1,100 MT), and Canada (2,800 MT, including decreases of 400 MT). Exports of 29,800 MT were down 2 percent from the previous week and 1 percent from the prior 4-week average. The destinations were primarily to Mexico (13,500 MT), Japan (3,800 MT), China (3,500 MT), South Korea (2,700 MT), and Canada (1,600 MT).

China's pig farms see surge in African swine fever

Reuters reports a surge in African swine fever infections in China is set to reduce hog output later this year, according to farm managers and analysts. The incurable disease has plagued China for years, with an initial wave during 2018 and 2019 killing millions of pigs and leading to a dramatic decline in meat output that roiled global markets. Chinese farms have significantly improved hygiene and procedures since then to reduce the impact of the virus, but it still circulates constantly, often spiking in winter. Infections this year began to surge relatively late in the season, around the Lunar New Year holiday in January, when millions of people travelled after China had relaxed its COVID curbs, said three managers at pig farming companies and analysts.

Smithfield Foods CEO defends pork producer’s Chinese ownership

Shane Smith points to sales growth since China’s WH Group acquired the Virginia company. The comments come following growing concerns from lawmakers over Chinese control of U.S. agriculture. 

“We’re as American today as we were in 2013,” he said during an interview cited by the Wall Street Journal at his office overlooking Virginia’s Pagan River. “When you meet with politicians and have those discussions, they seem to understand that.” 

WH’s ownership has helped Smithfield weather an industrywide decline in exports to China and ship more pork products overseas, said Smith. Pork companies mainly export the head, feet and other byproducts of the pig. 

“We’ve been able to collaborate on things like introducing an American-style bacon into China,” he said. “It’s been a really successful relationship.” 

Of note: Smith said Smithfield has discussed contingency plans in the event China escalates efforts to absorb Taiwan, a concern among U.S. leaders. Some lawmakers have called for a ban on Chinese purchases of U.S. farmland. Roughly half of the approximately 350,000 acres of U.S. farmland owned by Chinese entities is represented by Smithfield’s more than 400 company-owned hog farms and 43 plants, according to federal data.

USDA Announces $43M+ Investment in Meat & Poultry Processing Research, Expansion & Innovation

The U.S. Department of Agriculture (USDA) announced today an investment of more than $43 million in meat and poultry processing research, innovation and expansion in support of its ongoing efforts to transform the food system at every stage along the supply chain. This investment is funded through the American Rescue Plan and the Agriculture and Food Research Initiative (AFRI).

As part of this total investment, the University of Arkansas was awarded a $5 million grant from the AFRI Center of Excellence for Meat and Poultry Processing and Food Safety Research and Innovation (MPPFSRI). In addition, $13.9 million in grants from the Meat and Poultry Processing Research and Innovation – Small Business Innovation Research Phase III – program were awarded to 14 small and mid-sized meat and poultry processors. These grants are administered by USDA’s National Institute of Food and Agriculture.

Additionally, one $25 million Meat and Poultry Processing Expansion Program (MPPEP) grant was awarded to Wholestone Farms for a major plant expansion in Fremont, Nebraska. This grant was administered by USDA Rural Development.

The next week’s likely high-low price trading ranges:

April lean hog futures--$81.275 to $88.00 and with a sideways bias

May soybean meal futures--$465.80 to $498.00, and with a sideways bias

May corn futures--$6.06 3/4 to $6.42 3/4 and a sideways-lower bias

Latest analytical daily charts lean hog, soybean meal and corn futures