The pig traders’ perspective: Recent price action in the August lean hog futures market has been choppy and sideways on the daily chart. That suggests more of the same in the near term. Summer-month lean hog futures this week extended their discounts to the CME cash hog index, signaling traders anticipate the cash market will soon start to soften as market-ready supplies build during the second half of the year. However, if the cash index continues to rise, nearby futures would be supported. USDA’s Hogs & Pigs (H&P) Report on Wednesday showed the June 1 inventory down 0.9%, with the marketing herd also down 0.9% and the breeding herd 0.8% smaller than year-ago. Those figures were virtually in line with traders’ expectations and should have no significant market impact on futures prices.

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

US pork export sales improve in latest week

USDA Thursday reported US pork net sales of 32,300 MT for 2022 were up 27 percent from the previous week and from the prior 4-week average. Increases were primarily for Mexico (20,700 MT, including decreases of 200 MT), Japan (3,700 MT, including decreases of 100 MT), Australia (2,700 MT), Canada (1,400 MT, including decreases of 400 MT), and South Korea (1,100 MT, including decreases of 200 MT). Total net sales reductions of 100 MT for 2023 were for

Australia. Exports of 27,700 MT were down 4 percent from the previous week and 1 percent from the prior 4-week average. The destinations were primarily to Mexico (12,200 MT), China (4,300 MT), Japan (4,000 MT), South Korea (2,400 MT), and Canada (1,300 MT).

African swine fever outbreak in Poland

In June 2022, Poland reported four new outbreaks of African Swine Fever (ASF) on hog farms, The outbreaks were located in ASF restricted areas that have a high concentration of ASF infections in wild boars. Additional outbreaks on farms are expected as the disease is more prevalent in the summer. With no new areas in Poland infected with ASF virus, the pork industry situation remains stable. Before the June reports, Poland’s last outbreak was in December 2021.

USDA quarterly US hogs and pigs report

United States inventory of all hogs and pigs on June 1, 2022 was 72.5 million head. This was down 1 percent from June 1, 2021, and down slightly from March 1, 2022. Breeding inventory, at 6.17 million head, was down 1 percent from last year, but up 1 percent from the previous quarter. Market hog inventory, at 66.4 million head, was down 1 percent from last year, and down slightly from last quarter. The March-May 2022 pig crop, at 32.9 million head, was down 1 percent from 2021. Sows farrowing during this period totaled 2.99 million head, down 1 percent from 2021. The sows farrowed during this quarter represented 49 percent of the breeding herd. The average pigs saved per litter was 11.00 for the March-May period, compared to 10.95 last year.

United States hog producers intend to have 3.02 million sows farrow during the June-August 2022 quarter, down 1 percent from the actual farrowings during the same period one year earlier, and down 7 percent from the same period two years earlier. Intended farrowings for September-November 2022, at 3.01 million sows, are down 1 percent from the same period one year earlier, and down 5 percent from the same period two years earlier. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 50 percent of the total United States hog inventory, up 1 percent from the previous year.

Revisions All inventory and pig crop estimates for June 2021 through March 2022 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. The revision made to the March 2022 all hogs and pigs inventory was 0.6 percent. The revision made to the December 2021-February 2022 pig crop was 0.4 percent. The net revision made to the December 2021 all hogs and pigs inventory was 0.3 percent. A net revision of 1.2 percent was made to the September-November 2021 pig crop.

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

August lean hog futures--$101.30 to $111.05, and with a sideways bias

September soybean meal futures--$410.00 to $440.00, and with a sideways-higher bias

December corn futures--$6.10 to $6.50 and a sideways-lower bias

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