Pig outlook: Lean hog futures bulls continue to struggle

Market analyst Jim Wyckoff shares an update on the global pork industry
calendar icon 12 May 2023
clock icon 3 minute read

Lean hog futures bears continue to hold the solid overall near-term technical advantage, with no strong, early clues that a market bottom is close at hand. However, cash hog market fundamentals are improving a bit. The latest CME lean hog index is up 43 cents to $75.07 (as of May 9), the highest level since the end of March. While the cash hog index has been on a steady climb over the past two-and-a-half weeks, daily gains likely need to increase to attract sustained buyer interest in lean hog futures. The hog market bulls continue to anticipate improving cash hog prices amid seasonal strength during the grilling season.

US Supreme Court rejects challenge to California humane pig confinement law

The US Supreme Court on Thursday preserved a California law banning the sale of pork in America's most-populous state from pigs kept in tightly confined spaces, rejecting an industry challenge claiming that the voter-backed animal welfare measure impermissibly regulates out-of-state farmers, reported Reuters. The decision of the court was 5-4, with Chief Justice John Roberts and Justices Samuel Alito, Brett Kavanaugh and Ketanji Brown Jackson dissenting. The justices upheld a lower court's decision to dismiss a lawsuit by the National Pork Producers Council and the American Farm Bureau Federation seeking to invalidate the law. The industry had argued that the measure violated a U.S. Constitution provision called the Commerce Clause that courts have interpreted as empowering the federal government - not states - to regulate interstate commerce.

Weekly USDA US pork export sales

Pork: Net US sales of 30,000 MT for 2023 were down 39 percent from the previous week and 28 percent from the prior 4-week average. Increases were primarily for Japan (9,900 MT, including decreases of 100 MT), China (5,600 MT, including decreases of 100 MT), Mexico (5,500 MT, including decreases of 300 MT), the Philippines (1,700 MT), and South Korea (1,300 MT, including decreases of 500 MT). Exports of 36,900 MT were down 4 percent from the previous week and unchanged from the prior 4-week average. The destinations were primarily to Mexico (13,900 MT), Japan (5,600 MT), China (5,400 MT), South Korea (2,700 MT), and Canada (2,000 MT).

Indonesia reports ASF outbreak on islands near Singapore

Indonesia reported an outbreak of African Swine Fever (ASF) on a farm on the Riau Islands located near Singapore, according to the World Organization for Animal Health (WOAH). The outbreak was detected April 1 and confirmed April 28, killing 35,297 pigs on a farm with a herd of 285,034. Indonesian authorities indicated the source of the outbreak is still not known and was initially discovered the Singapore Food Agency in pigs imported from Indonesia.

Tyson Foods cuts 2023 sales outlook

Tyson Foods reported a loss in its second quarter and cut its full-year forecasts for sales due to declining demand, now expecting 2023 sales to be between $53 billion to $54 billion vs their prior outlook sales would be from $55 billion to $57 billion. Tyson said beef prices fell 5.4% and pork prices were down 10.3% in its second quarter, with CEO Donnie King labeling the current protein market as challenging. Beef sales volumes were down 3%, the firm said. Economic concerns by consumers have resulted in meat packers struggling with margins as they have had to increase prices for their products.

China considering pork purchases to support prices

China’s state planner will hold discussions with other departments about a new round of pork purchases for state reserves to support hog prices, it said on Friday. Prices were below 15 yuan ($2.17) per kilogram last month, data from Shanghai JC Intelligence Co. shows, pressured by excess supply. In Cangzhou, Hebei, one of the main hog-trading locations in northern China, hog prices have slumped 44% since last October.

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

June lean hog futures--$82.00 to $90.00 and with a sideways-lower bias

July soybean meal futures--$410.00 to $440.00, and with a sideways-lower bias

July corn futures--$5.69 1/4 to $6.00 and a sideways bias

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

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