The pig traders’ perspective: July lean hog futures have made a solid rebound from the May low and prices are in a fledgling uptrend on the daily bar chart. The technical charts have turned more friendly for the hog market bulls. Meantime, the CME lean hog index continues to ratchet higher. It appears the much-anticipated seasonal rally in the hog market has begun, even if it was a bit late. There are still some market concerns regarding expensive meat curtailing consumer demand with the summer grilling season ahead. Still, consumers crimped by rising inflation in the overall economy may opt for cheaper pork cuts to throw on the grill, as opposed to very pricey beef.

Latest US Department of Agriculture (USDA) reports, and other news

US pork export sales see solid rise

USDA Thursday reported US pork net sales of 36,700 MT for 2022 were up 52 percent from the previous week and 39 percent from the prior 4-week average. Increases primarily for Mexico (15,100 MT, including decreases of 400 MT), Canada (5,700 MT, including decreases of 400 MT), China (5,300 MT, including decreases of 300 MT), Japan (3,600 MT, including decreases of 100 MT), and Colombia (2,700 MT, including decreases of 100 MT), were offset by reductions for El Salvador (100 MT). Total net sales of 100 MT for 2023 were reported for Australia. Exports of 33,000 MT were up 6 percent from the previous week and 4 percent from the prior 4-week average. The destinations were primarily to Mexico (13,700 MT), China (5,200 MT), Japan (4,700 MT), South Korea (2,900 MT), and Canada (1,600 MT).

USDA making $200 million available for new meat processing capacity expansion program

The $200 million will “provide much-needed financing to independent meat and poultry processors to start up and expand operations,” USDA said. The funding will include $25 million for workforce training. The program will provide grants of up to $15 million to qualifying recipients that will use the funding to create a revolving loan fund to finance capacity expansion.

USDA raises food inflation forecasts for fourth consecutive month

USDA raised its food price outlook to 6.5% to 7.5% above year-ago, up from April’s forecast for a rise of 5% to 6%. The midpoint of that range would be the biggest rise in food prices since they jumped 7.8% in 1981. USDA now forecasts food away from home (restaurant) prices will rise 6% to 7% this year, up from its April forecast for a 5.5% to 6.5% increase. That would be the biggest rise in restaurant prices since 1981 when they increased 9%. Food at home (grocery store) prices are now forecast to increase 7% to 8%, up from the April outlook for a 5% to 6% rise. That would be the highest grocery store price rise since 1980 when prices jumped 8.1%.

Bearish meat demand implications in USDA Cold Storage Report

USDA's Cold Storage Report out earlier this week showed beef stocks at the end of April were a record for the month at 531.7 million pounds. While that was down 4.1 million lbs. (0.8%) from March, the five-year average was a 15.5-million-lb. decline during the month. Frozen beef inventories increased 82.9 million lbs. (18.5%) from year-ago and stood 74.1 million lbs. (16.2%) above the five-year average. Pork stocks at 530.2 million lbs. rose 44.3 million lbs. (9.1%) from March, far greater than the five-year average of a 16.4-milllion-lb. increase during the month. Pork stocks rose 73.3 million lbs. (16.0%) from last year but were still 52.7 million lbs. (9.0%) under the five-year average.

China’s pork imports down sharply from year-ago in April

China imported 140,000 MT of pork in April, according to official customs data, the same amount as March but down 67.6% from last year. Through the first four months of this year, China’s pork imports plunged 65.1% from the same period last year to 560,000 MT.

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

July lean hog futures--$105.00 to $112.50, and with a sideways-higher bias

July soybean meal futures--$405.00 to $440.00, and with a sideways-higher bias

July corn futures--$7.50 to $8.00 and a sideways bias

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