Pig outlook: Lean hog market fundamentals still bullish

Lean hog futures this week have climbed amid persistent strength in the wholesale US pork prices
calendar icon 6 August 2021
clock icon 4 minute read

Carcass cutout values this week rose to the highest level since June 11 and within $4 of the seven-year high of $134.94 reached June 8. Additional support comes from nearby lean hog futures’ roughly $4 discount to the CME lean hog cash index, which most recently was at $112.04 for the two days ending July 30.

Latest USDA and other news regarding the global pork industry

China suspends meat imports from a Brazil processing plant

China has reportedly banned meat imports from the food processor BRF SA’s Lucas Rio Verde plant located in central Brazil, the company said in a statement yesterday. The plant processes pork and chicken. The company said it would take steps to reverse the ban, working in conjunction with Chinese and Brazilian authorities, but it did not disclose what the holdup was. BRF did say that it was not officially notified of the ban and only learned of the suspension when it appeared on China’s customs website.

Mexico bans pork imports from Dominican Republic

Mexico’s agriculture ministry has banned pork and derived products from the Dominican Republic and other countries dealing with African swine fever. The country is also increasing its scans of baggage coming into the country from the Dominican Republic for “product risk,” the ag ministry said in a statement. The U.S. already had bans in place against pork from the Dominican Republic.

New animal welfare rules could cause a bacon shortage in California

At the beginning of next year, California will begin enforcing an animal welfare proposition approved overwhelmingly by voters in 2018 that requires more space for breeding pigs, egg-laying chickens and veal calves. According to the Associated Press, while national veal and egg producers are optimistic they can meet the new standards, only 4% of hog operations now comply with the new rules.

“That means that unless the courts intervene or the state temporarily allows non-compliant meat to be sold in the state, California will lose almost all of its pork supply, much of which comes from Iowa, and pork producers will face higher costs to regain a key market,” the AP item said.

Tyson Foods to require Covid vaccinations for its US workers

Tyson said it would offer a $200 bonus to its front-line workers as an incentive, though some union leaders pushed back, saying U.S. regulators hadn’t yet fully approved the vaccines . Tyson announced Tuesday it will require its workforce to be vaccinated for Covid but is getting pushback from the United Food and Commercial Workers International (UFCWI) union.

"We did not take this decision lightly," Tyson Chief Executive Donnie King said. "We have spent months encouraging our team members to get vaccinated — today, under half of our team members are."

Tyson said it was negotiating with unions on the action. While UFCWI President Marc Perrone said the union has encouraged members to get vaccinated, they are concerned Tyson is implementing the mandate “before the FDA has fully approved the vaccine.”

The union is calling on food companies to negotiate directly with front-line workers on any vaccination order and they want companies to provide “paid vaccine leave.” Tyson said that union workers make up about one-third of their hourly workforce.

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

October lean hog futures--$87.275 to $94.05 and with a sideways-higher bias

December soybean meal futures--$337.00 to $365.00, and with a sideways-lower bias

December corn futures--$5.32 1/4 to $5.73 and a sideways bias

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

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