Hog Weekly Outlook – June 24: US Lean Pork Futures Continue to Fall Strong
Technically, the lean pork futures market is now well oversold in the short term and should see a good corrective rebound to the upside. Basically, worries about slowing demand and increasing supply are in control of the bears. The market was awaiting the USDA Quarterly Hog and Hog Report Thursday afternoon, which is expected to show a 2.3% year-over-year decline in the US hog herd on the 1st. June. index. The two are due to merge by expiration in two weeks. USDA’s monthly Cold Storage report on Tuesday was found to be bearish. The USDA estimated U.S. frozen pork inventories as of May 31 at 461.1 million pounds, down 1.5% from a year earlier but up 0.9% from late April, suggesting a slowdown in US pork exports.
Latest News From USDA And Others Regarding The Global Pork Industry
U.S. pork export sales edged down last week
The USDA said Thursday that US pork net sales of 28,600 tonnes for 2021 were down 2% from the previous week and 4% from the previous 4-week average. The increases mainly concern Mexico (11,500 MT, including decreases of 900 MT), Canada (5,200 MT, including decreases of 400 MT), Japan (3,200 MT, including decreases of 500 MT), China (2,000 MT, including decreases of 800 MT) and South Korea (1,800 MT, including decreases of 500 MT). Exports of 33,600 tonnes were down 12 percent from the previous week and 10 percent from the average of the previous 4 weeks. The destinations were mainly Mexico (15,700 MT), China (7,400 MT), Japan (3,700 MT), South Korea (1,700 MT) and Canada (1,500 MT).
Consumer group sues Smithfield Foods for misleading consumers during pandemic
Consumer group Food & Water Watch has filed a lawsuit against Smithfield Foods, accusing the company of ‘scaring’ about a meat shortage during the Covid-19 pandemic and of distorting worker safety measures. The group challenged Smithfield, saying the country was “dangerously close to the edge in terms of meat supply” as the company’s meat exports were on the rise. “Government data further refutes Smithfield’s pessimistic warnings that inventories of pork held in cold stores were well over hundreds of millions of pounds, which analysts say could have kept grocery stores stocked with pork for decades. months, even in the absence of any additional production, ”the costume said. The group said Smithfield’s sourcing warnings prompted consumers to stock up on meat. Smithfield said the allegations of price manipulation were “false” and stressed that its worker safety measures were comprehensive and guided by medical and worker safety experts.
U.S. meat packaging industry faces tougher scrutiny
the the Wall Street newspaper reported that new rules and legislation would reorganize the livestock and poultry markets. The USDA is developing new rules that would change the way companies pay chicken farmers, while making it easier for farmers to pursue disputes against meat packers, the agency said this month. On Capitol Hill, Republican and Democratic lawmakers proposed legislation that would require beef processors to buy more cattle from open markets and set minimum regional prices. Senators this month introduced a separate bill that would appoint a special investigator to enforce meat packaging regulations and investigate potential anti-competitive behavior.
The Senate Agriculture Committee will hold a hearing on Wednesday to examine livestock purchases by meat packers and their impact on livestock markets and hamburger prices for consumers. Witnesses at tomorrow’s hearings:
Andy Green, USDA’s senior advisor on Fair and Competitive Markets, said some of the problems farmers have stemmed from a handful of companies controlling most of meat processing in the United States. “The American food industry has a monopoly problem,” said Green, a former senior economic policy researcher at the think tank Center for American Progress who joined the USDA earlier this year. “There are a lot of things we want to do to bring competition back to the market. ”
The North American Meat Institute, which represents meat companies, opposes stricter regulations for the industry. Mark Dopp, the group’s head of regulatory affairs, said the USDA’s rules would reduce options for farmers to sell livestock, allow frivolous lawsuits and potentially increase supermarket prices for burgers and chicken breasts. The USDA under the Obama administration proposed similar rules which were later blocked by Congress and legal challenges, he said, “It was a bad idea then, and still is. a bad idea.
The share of the Big Four beef processors in the livestock market has remained roughly stable for 25 years, according to data compiled by the Meat Institute, while some beef producers made record profits in 2014. strengths at work, Dopp said, as disruptions that shut down meat factories left a greater supply of livestock in the market, pushing down livestock prices.
The USDA recently announced grants and loans to support new and smaller meat processing plants as part of a $ 4 billion program to strengthen the U.S. food system. Calls for the government to make the food system more resilient by ensuring there is more packaging capacity “ignore important considerations,” Dopp said. “First, in the pork industry, more capacity has been added in recent years in response to market forces. Major harvesting facilities have opened in recent years in Michigan, Missouri and Iowa, with smaller factories opening as well – before the pandemic and in response to market forces. And last week, Wholestone Farms announced plans to build a packaging facility in South Dakota.5 In the cattle business, a plant recently opened, and expansions and new facilities were announced, all in response to market forces.
USDA Announces Meat Inspection Grant Program
USDA has announced that $ 55.2 million in competitive grant funding is being made available under the new Meat and Poultry Inspection Grants Program (MPIRG). The effort uses funds set aside as part of fiscal year 2021 omnibus spending and the Covid-19 relief plan enacted in December. “We are building capacity and increasing economic opportunities for small and medium-sized meat and poultry processors and producers across the country. USDA Secretary Tom Vilsack said. The USDA has said it is encouraging MPIRG applications that focus on “improving the capacity and efficiency of meat and poultry slaughter and processing; develop new existing markets and expand; increase capacity and better meet consumer and producer demand; maintain strict food inspection and safety standards; gain greater commercial presence ”, and those aimed at increasing access to slaughter or processing facilities“ for small farms and ranches, new and beginning farmers and ranchers, socially disadvantaged producers and seasoned producers “.
Eligible facilities include commercial enterprises, cooperatives, and tribal enterprises. MPIRG’s Federal Inspection Grant Planning (PFGI) project is available for facilities currently in operation and works at federal inspection, while the Cooperative Interstate Shipments (CIS) Compliance Project is for factories. who work in compliance with their state’s food safety and inspection standards. Service (FSIS) CIS program. Currently, Indiana, Iowa, Maine, Missouri, North Dakota, Ohio, South Dakota, Vermont, and Wisconsin have CIS programs.
Applications for MPIRG grants must be submitted by August 2, 2021. USDA’s Agricultural Marketing Service (AMS) will host webinars to guide applicants through the application process.
More warnings for Chinese pork producers not to panic
Chinese pork prices continue to decline, with live pork prices now falling 65% year-to-date. In response, the China Association of Animal Agriculture (CAAA) issued a notice saying, “In a time of falling prices, don’t panic, and besides, don’t listen to rumors and plan production with a mentality. game. ”This comes shortly after similar comments from the Chinese state planner last week. CAA also encouraged farmers to speed up the elimination of less efficient breeding sows and focus on reducing costs. Pig margins are at their lowest since 2014 as farmers sell overweight pigs and China has remained an aggressive importer of pork. Some expect the situation to force small producers out, speeding up the country’s transition to industrial pig farming. The pressure could persist. Cofco Futures recently noted: “Currently, large companies are at 55% of their slaughter schedule and small farmers still have a lot of stock in their hands. We expect the supply pressure to be quite significant at the end of June. ”
The likely high-low price ranges for next week:
August Lean Pork Futures – $ 100.00 to $ 110.00 and with a higher lateral bias
December soybean meal futures – $ 350.00 to $ 375.00, and with a sideways bias