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Jim Long Pork Commentary: US pork prices remain strong

11 November 2020, at 2:30pm

The US hog slaughter last week was over 2.7 million head, about the same as a year ago. Despite this big number US pork cut-outs stayed in the mid 80’s (84.06¢ Friday). We find this a powerfully positive sign that the pork cut-outs are so strong despite the large amount of pork available.

US pork exports continue strong at 37,700 metric tonnes in the latest week. With the last week the largest since May to China at 14,560 metric tonnes. US-China pork exports will be pushed now by the ban of pork from Germany due to ASF. Year to date total US pork exports are 1,595,609 mt compared to 1,278,834 mt last year. Plus 25%. The increase is almost all attributed to China’s enhanced exports.

China is expanding the pig production despite continuous ASF events. The $200 plus US per head profits are all the stimulus needed to fuel the production increase. We expect good exports to China through 2021 from US-Canada helped by the German ASF ban but by 2022 we expect less pork will be needed in China and their hog prices will decline from their historically high levels back to normal type prices. The one wild card as China pork prices decline what does it do to per capita consumption. Every 1 lb. increase of 1.4 billion people is a lot of pork.

ASF in Germany

There now have been 123 ASF cases identified in Germany. Up to last week, all were found in the Brandenburg region but now one has been identified in Saxony. The combination of loss of Asian markets and issues with slowdown of German slaughter plants due to Covid-19 issues is impacting the market. Last week Danish 30 kg (64 lb.) feeder pig price for export quoted as low as $28 U.S. while the 52-week average is about $75 U.S. When coupled with rising feed prices lots of money will be lost at their feeder pig price levels. The European sow cull price average is now $80 U.S. per head. The two German Black Swan events are hitting the markets hard with no solution for either in the near term.

GMO Pork

We understand one of the major US packers shareholders-management has made it a policy to never slaughter GMO (Gene-Edited) hogs. They don’t want to risk their brand with a consumer backlash against GMO pork. We expect a US Democratic administration will keep all oversight-approvals of GMO (Gene-Edited) swine with the Food and Drug Administration. The chances of legal approval will remain next to zero for GMO (Gene-Edited) in our opinion. The Swine Genetic company that has promoted the idea that they would sell producers GMO (Gene-Edited) Swine breeding stock in the future might need another story.

“He who works the land will have abundant food, but he who chases fantasies lacks judgment.” - The Bible Proverbs 12:11 -