The December lean hog futures market has seen a price uptrend negated on the daily bar chart and a bear flag pattern has just formed as the bulls have faded badly the past week. Fundamentally, the CME cash hog index continues to slip, with the latest reading down 17 cents to $86.14 (as of Sept. 26), marking the fourth straight daily decline. Traders wonder if the cash hog market has started what’s likely to be an extended decline into winter as slaughter supplies build seasonally. However, wholesale pork values continue to show strength below $100.00 despite hesitancy above that level. The improved retail outlook is supportive for pork and hog prices, especially with retail beef prices at all-time highs. The tightness of pork inventories showed in Monday’s USDA Cold Storage report and ensuing demand for hams in the holiday season could be a bullish element for the hog market in the coming weeks.

Weekly USDA US pork export sales

Pork: US net sales of 27,400 MT for 2023 were down 9 percent from the previous week and 6 percent from the prior 4-week average. Increases primarily for Mexico (11,600 MT, including decreases of 200 MT), Japan (4,500 MT, including decreases of 300 MT), South Korea (3,900 MT, including decreases of 100 MT), Colombia (1,900 MT), and China (1,500 MT, including decreases of 100 MT), were offset by reductions for Vietnam (200 MT). Exports of 30,000 MT were up 17 percent from the previous week and 11 percent from the prior 4-week average. The destinations were primarily to Mexico (12,800 MT), China (3,600 MT), Japan (3,400 MT), South Korea (3,200 MT), and Canada (2,200 MT).

USDA Hogs and Pigs Report out Thursday afternoon

USDA’s Hogs & Pigs Report at 2:00 p.m. central time is expected to show the hog herd down 0.8% from last year as of Sept. 1. Market hogs are expected to decline 0.7%, while the breeding herd is anticipated to be 1.3% smaller. Analysts expect summer farrowings to come in 3.4% smaller than last year, while fall and winter farrowing intentions are anticipated to be down 3.5% and 2.1%, respectively. Also key will be revisions to past data, which are likely after summer slaughter consistently ran above levels implied in the June report.

China’s sow herd declines

China’s sow herd totaled 42.41 million head at the end of August, according to the country’s ag ministry, down 0.7% from July and 1.9% smaller than last year. Hog slaughter surged 22.1% from year-ago in August.

Grocery inflation expected to decline as retail pork prices drop

USDA's monthly Food Price Outlook reveals that after an 11.4% increase in grocery prices last year, retail pork prices are set to decline by 1.1% this year, contributing to an overall grocery inflation rate of 5.1%. The report anticipates a more moderate 1.6% inflation rate for groceries in the coming year. While prices for most groceries are expected to rise, the largest increases are forecasted for sugar and sweets, as well as fats and oils, both with a 9.4% increase. This represents a decrease in the number of food categories with price increases exceeding 9% compared to previous reports, with pork being the only category expected to see a price decline. USDA has consistently adjusted its grocery price inflation forecasts downward throughout the year, with August being the exception when it predicted a 5.2% increase.

US pork stocks climb less than normal in August

USDA’s Cold Storage Report US pork stocks totaled 471.1 million lbs., up 327,000 lbs. from July. The five-year average was a 10.7-million-lb. increase during the month. Pork inventories fell 71.5 million lbs. (13.2%) from last year and were 58.1 million lbs. (11.0%) less than the five-year average.

A pig’s heart was transplanted into a man

It’s only the second time the groundbreaking surgery has ever been performed. University of Maryland doctors said that a Navy veteran who had been facing death from heart failure was talking and laughing after receiving the genetically modified heart two days before. The same team performed the surgery the first time about a year ago on a different patient who lived for two months afterward. These efforts at animal-to-human transplants come amid a shortage of human organs for patients who need them. Link for details.

Labor Dept. investigates Perdue Farms and Tyson Foods over migrant children's employment in meat plants

The U.S. Labor Department has initiated an investigation into poultry giants Perdue Farms and Tyson Foods following a report that revealed some of their contractors employed migrant children to perform cleaning tasks in meat-processing plants. The investigation comes after an article published in the New York Times magazine disclosed that migrant children were working overnight shifts at these companies' plants.

Both Perdue and Tyson have expressed their willingness to cooperate with the federal investigation and have asserted that they were unaware of children working in their plants. They emphasized that cleaning services in their facilities are outsourced to sanitation firms.

The Labor Department's inquiry targets a Tyson plant and a separate Perdue plant, both located in Virginia. The agency is exploring the possibility of holding these companies responsible for their contractors' labor practices, based on the principle of joint employment.

David Weil, former administrator of the Labor Department's Wage and Hour Division during the Obama administration, noted that there is precedent for holding companies accountable for their contractors' labor violations. This investigation raises questions about child labor practices and the enforcement of regulations in the meat-processing industry, potentially leading to consequences for major players in the sector.

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

December lean hog futures--$70.775 to $78.70 and with a sideways-lower bias

December soybean meal futures--$379.00 to $405.00, and with a sideways-lower bias

December corn futures--$4.67 3/4 to $4.95 and a sideways bias

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