The pig traders’ perspective

The lean hog futures market remains fully bullish, with no strong technical clues to suggest a market top is close at hand. The path of least resistance for prices in the near term will remains sideways to higher.

Fundamentally, USDA’s Hogs and Pigs Report Wednesday afternoon showed hog herd contraction was greater than expected and producers are indicating no signs they will expand anytime soon. USDA estimated the U.S. hog herd at 72.2 million head as of March 1, down 1.7 million head (2.3%) from year-ago and 837,000 head less than the average pre-report estimate implied. The market hog inventory declined 2.4% and the breeding herd dropped 1.9%. That was the smallest March hog herd and market hog inventory since 2018. The breeding herd was the smallest since 2017.

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

US pork export sales down in latest week

USDA Thursday reported US pork net sales of 27,600 MT for 2022 were up 19 percent from the previous week, but down 14 percent from the prior 4-week average. Increases primarily for Mexico (14,300 MT, including decreases of 300 MT), Japan (4,000

MT, including decreases of 200 MT), South Korea (2,400 MT, including decreases of 500 MT), Canada (2,300 MT, including decreases of 700 MT), and the Dominican Republic (1,200 MT), were offset by reductions for Chile (300 MT) and El Salvador (100 MT). Exports of 30,600 MT were up 5 percent from the previous week and 8 percent from the prior 4-week average. The destinations were primarily to Mexico (13,200 MT), Japan (5,400 MT), China (3,500 MT), South Korea (2,900 MT), and Canada (1,600 MT).

Carl Icahn takes his pregnant pig campaign to Kroger

Carl Icahn, the activist investor who has been prodding McDonald’s over the treatment of pregnant pigs in its supply chain, also raised the issue at Kroger, where he has nominated two people to the national grocery chain’s board. Icahn told Kroger he was concerned about animal welfare. Kroger said it isn’t directly involved in raising or processing animals but it is committed to helping protect the welfare of animals in its supply chain. Icahn objects to pig producers using small crates for pregnant pigs, something Kroger said it expects its suppliers to stop doing by 2025. Icahn owns about 100 Kroger shares and met with Kroger for the first time on March 25 before submitting the names, Kroger said. Kroger’s average hourly wage is $17, which is up 25% over the past four years, it said. Icahn nominated Alexis C. Fox, an animal-rights activist, and Margarita Paláu-Hernández, an investor. Kroger said it would review the matter, adding its shareholder meeting hasn’t been scheduled.

Hog diseases result in Mexico buying US pork at an unprecedented pace

The US is shipping record amounts of pork to Mexico as hog diseases are shrinking the Mexican hog herd. Outbreaks of porcine epidemic diarrhea virus (PEDV) and porcine reproductive and respiratory syndrome (PRRS) have been killing pigs in Mexico. Some Mexican farmers are also shrinking herds because of high feed costs.

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

June lean hog futures--$115.55 to $130.00, and with a sideways-higher bias

May soybean meal futures--$450.00 to $494.70, and with a sideways bias

May corn futures--$7.00 to $7.60, and a sideways bias

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