The pig traders’ perspective: Lean hog futures traders remain bullish late this week, as the discount in the front futures contract is now less than the seasonal average from now until mid-December. December lean hog futures finished Wednesday $5.825 below the latest CME Lean Hog index quote of $93.20 (as of Oct. 18). Technically, December hogs are due for a pause or short-term pullback, but the market remains overall bullish. There’s growing optimism an early seasonal low may have already been posted in the cash hog index and there are hopes for stronger Chinese demand in the coming months.

Weekly USDA pork export sales

Pork: US net sales of 40,800 MT for 2022 were primarily for Mexico (14,800 MT, including decreases of 300 MT), Japan (11,000 MT, including decreases of 200 MT), Australia (3,500 MT), Canada (3,100 MT, including decreases of 400 MT), and China (3,000 MT, including decreases of 100 MT). Exports of 28,400 MT were primarily to Mexico (13,700 MT), China (4,100 MT), Canada (2,100 MT), Japan (2,100 MT), and South Korea (2,000 MT).

China encourages farmers to sell more hogs

China’s state planner has increased its coordination with large-scale hog farms to ensure stable supplies, as it tries to cool soaring prices in the world’s largest pork market. China’s largest hog producers have agreed to “undertake social responsibilities,” said the National Development and Reform Commission (NDRC) said. The companies will take the lead in ensuring supply and price stability in the market, release fattened hogs in a timely manner and speed up the slaughter pace when necessary, it added. Beijing has already issued several warnings to farmers urging them to stop holding back hogs from slaughter to wait for higher prices.

China to sell more pork stocks

China will sell another 20,000 MT amount of pork from state-owned reserves on Oct. 21 – the sixth batch of pork released from state stockpiles. The National Development and Reform Commission said it would work on securing hog supplies and stabilizing prices, and continue to release pork reserves.

Chinese hog producers looking at alternatives to soymeal amid shortages, high prices

Shipping delays from the U.S. due to low water levels on the Mississippi River will further tighten Chinese soybean supplies and push soymeal prices higher. As a result, Chinese hog producers are looking for alternative protein sources. Cash soymeal prices in Dongguan, Guangdong province climbed to an all-time high of 5,680 yuan ($789) per metric ton last week, compared with 3,500 yuan ($486) at this time last year. China’s soybean imports are likely to fall to their lowest in more than two years this month, having dropped in September and August.

USDA’s livestock, dairy and poultry outlook

Pork/Hogs: Based on information in the September Quarterly Hogs and Pigs, pork production for 2023 is reduced to 27.3 billion pounds, 0.7 percent greater than the production forecast for 2022. Hog prices in 2023 are expected to average $66.75 per cwt, about 6 percent lower than prices forecast for 2022. The forecast for total 2023 U.S. pork exports is reduced to 6.28 billion pounds, 1.7 percent lower than exports forecast for 2022.

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

December lean hog futures--$81.00 to $91.35, and with a sideways-higher bias

December soybean meal futures--$391.90 to $425.00, and with a sideways bias

December corn futures--$6.60 to $7.00 and a sideways bias

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