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Jim Long Pork Commentary: US Pork Cold Storage

29 October 2020, at 5:30pm

At the end of September, Pork in US Cold Storage was down 22% from a year ago, 466,674 vs. 598,750 (1,000 pounds). This is quite positive for markets going forward. Less Pork in storage means buyers have less to pull from.

Other Observations

Last week the US marketed 2,679,000 hogs, a year ago 2,690,000. The USDA Hogs and Pigs Report September 1st indicated 10% more hogs year over year. Almost 2 months gone and the hogs have failed to show up. Just like June USDA report, wrong, wrong, wrong. We doubt if anyone is keeping the hogs as pets.

Hog market weights are running similar or lower than a year ago. If hogs backed up, we would expect year over year heavier hogs.

If, in mid-August we had said US Pork Cut-Outs would be in the 90’s in late October, most would have said that was “insane”. Fact is they are. A huge reflection of overall domestic and export demand despite weekly hog marketing’s in the 2.7 million range. If we can get 90’s now with 2.7 million it’s hard to believe that prices won’t be higher when weekly numbers go to 2.4 - 2.5 million in 2021.

We understand China is back in market for split carcasses. Some plants are geared up. This is a result of Germany losing China - Asia as an export market due to ASF.

The hogs going to market now were born in April. In our opinion everything from April to September created a scenario to lower the sow herd and production. As weeks go on, we expect to see year over year weekly hog numbers decline. This will be price supportive.

US sow slaughter in September was 276,120 last year 238,300. An increase of 28,000. Year to date 2,508,400 a year ago 2,235,220. An increase of over 273,000 year over year. If anyone doubts there has been significant breeding her liquidation, they should review the sow kill. Also, from all we can observe sow death rates of 12% are at record levels, gilt retention has been low, and next to no new sow barns being built. Put it all together. Less sows to produce pigs.

The Chicken Little Economist who said in mid-August that the US would produce more hogs in 2021 than 2020 had no clue what he was talking about. You have to wonder if there are vested interests tied to futures trading that see it in their interest to bad mouth the prospects of prices and supply to the detriment of hog producers but to the benefit of Big City future trading sharpies.

We hear about the benefit of the futures market. The US has the only hog future market in the world. What’s the benefit? Most of the time US has the lowest hog prices in the world. As my late friend Doug Maus often said, “Chicago: Las Vegas casino with no rules.”

“In the casino, the cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all.

- Samuel "Ace" Rothstein_Casino movie