Pig outlook: lean pork futures prices are even higher
The pig merchant’s point of view
Lean pork futures prices this week hit new contract highs and are now reaching extremes set in 2014. The key to keeping these price levels high will be US pork export demand. Traders will have to wait until Friday for this week’s weekly USDA export sales counts, due to the Memorial Day holiday on Monday.
Pork prices in China continue to fall. Even farms that use their own piglets are now losing money. This could reduce new Chinese purchases of American pork.
The ransomware attack on JBS that halted processing of pigs earlier this week now appears to be over. Pork spot prices rose $ 3.21 on a national direct basis on Wednesday. Wednesday’s pig slaughter was estimated by the USDA at 439,000 head, up from 483,000 last Wednesday and 426,000 a year ago around the same time. A sign that all operations are not yet 100%.
The average hog weight in the Iowa / Southern Minnesota market fell 0.4 lbs in the week ending May 29 to 283.1 lbs, which is well below a year ago when COVID-19 related treatment closures / withdrawals were safeguarding supplies.
The likely high-low price ranges for next week
- August Lean Pork Futures – $ 113.00 to $ 120.00 and with a higher lateral bias
- July Soybean Meal Futures – $ 378.30 to $ 407.00, and with a
- July Corn Futures – $ 6.50 to $ 7.00 and a sideways bias
Truck driver shortage hits US meat market
A shortage of truck drivers is hurting many American meat wholesalers on both sides – enduring long delays in fulfilling their orders, then struggling to get their products to supermarkets and restaurants. This and other supply chain factors all contribute to what Shawn Reid, vice president of sales for WestSide Foods, called “the longest sustained rise in meat prices in my 35 years in this industry. business”.
Bronx-based meat wholesaler Baldor Specialty Food posted an ad last month on the Bruckner Freeway – a major thoroughfare for truckers – offering $ 3,000 signing bonuses for new drivers. Daniel Romanoff, president of Nebraskaland, is now offering a bonus of $ 4,000 to attract truck drivers.
U.S. Senate Committee on Agriculture Leaders: Hearing Needed on Livestock Pricing and Supply Chain
The key topic at a recent hearing for Janie Simms Hipp, USDA general counsel candidate, was concerns that meat packers are using their market weight to drive down prices paid to producers. Several GOP senators led by rank panel member John Boozman (R-Arkansas) were joined by committee chair Debbie Stabenow (D-Michigan) to request a hearing on the issue in order to “seek solutions”, as Stabenow said. Senator Roger Marshall (R-Kansas) told Hipp “my phone is exploding with this problem”.
Senators Boozman, John Hoeven (R-North Dakota), Roger Marshall (R-Kanansas) and Sen. Deb Fischer (R-Nebraska) told Hipp they were concerned about the cattle markets because the prices of canned beef are high while cattle prices are stagnant.
“My phone is blowing up over this problem,” Marshall said, with fifth- and sixth-generation Kansas ranchers telling him their operations were in danger. In some cases, a single buyer will show up, offer a price, and say, “Take it or leave it,” he said.
Hipp said her phone was “exploding too” and she promised to uphold the Packers and Stockyards Act and be in close contact with the Department of Justice on antitrust matters.
“I promise to you that I will get there [cattle price transparency] as one of my very, very top priorities, ”Hipp said. Of note, Hipp said she needed an economist and scientist “by my side” to brief her on technical issues in agriculture.
Six farmer groups have asked the Justice Department to investigate the highly consolidated meat packaging industry, where four companies slaughter more than 80% of all beef cattle and only a fraction of the cattle are sold in the spot market.
The meat industry is responding. “Cattle prices are where they are because they keep up with supply and demand, ”said the North American Meat Institute, on behalf of the meat packers. The industry says the USDA’s July 2020 report exonerated it from any wrongdoing. “The disruption in the beef markets was due to devastating and unprecedented events. “
Besides a Senate hearing on livestock pricing issues, others are also calling for a Senate Judiciary Committee hearing on the issue.
Latest news from the swine industry around the world
World food prices at their highest level since 2011
World food prices rose 4.8% from April to May, with a dramatic increase of 39.7% from last year, according to the food price index released by the Organization Food and Agriculture Organization (FAO).
The monthly gain was the largest since October 2010. The index has climbed for 12 consecutive months, with the index now at its highest level since February 2011.
“The sharp increase in May reflected soaring prices for oils, sugar and grains as well as firming prices for meat and dairy products,” FAO said. Note also, while the FAO calls for a record world cereal production in 2021-2022, it expects only a “marginal” increase in stocks. Global wheat production is forecast to increase 1.4% in the next marketing year to 785.8 million metric tonnes (MMT).