Pig outlook: Lean hog futures bulls stumble, Q3 delayed in Massachusetts

Bulls try to recover, China imports unchanged, Q3 enforcement delayed by federal court judge
calendar icon 19 August 2022
clock icon 4 minute read

The pig traders’ perspective: Lean hog futures on Wednesday initially extended Tuesday’s big sell-off but found support and fresh buying interest to post a strong rebound. While seasonal cash cycles suggest a downturn in the late August-early September time frame, partly reflecting lower consumer demand as the summer grilling season ends. But recent hog slaughter implies supplies are not rising nearly as fast as anticipated. Slaughter so far this week totaled 1.396 million head, 10,000 below the same period last week and 23,000 head fewer than the same week last year. The weekend kill may be key to the weekly total, but the numbers indicate hog slaughter is not increasing at the pace it normally does in mid-August. Tuesday’s lows now stand as key near-term support. A drop through those lows would be a stronger sign of a seasonal top and suggest an extended pullback, despite futures’ big discounts to the cash index.

US pork export sales down in latest reporting week

USDA Thursday reported US pork net export sales of 13,600 MT for 2022 were down 37 percent from the previous week and 43 percent from the prior 4-week average. Increases primarily for Mexico (7,100 MT, including decreases of 300 MT), Japan (2,600 MT, including decreases of 300 MT), South Korea (900 MT, including decreases of 600 MT), Colombia (700 MT, including decreases of 300 MT), and Canada (600 MT, including decreases of 400 MT), were offset by reductions for Honduras (200 MT), Guatemala (100 MT), and Indonesia (100 MT). Exports of 25,600 MT were down 6 percent from the previous week and 4 percent from the prior 4-week average. The destinations were primarily to Mexico (11,600 MT), China (5,000 MT), Japan (3,400 MT), South Korea (1,700 MT), and Canada (1,500 MT).

China’s pork imports unchanged in July but well below year-ago

China imported 120,000 MT of pork in July, unchanged from June but down 65.1% from last year. Through the first eight months of this year, China imported 930,000 MT of pork, also down 65.1% from the same period last year.

Court delays enforcement of US state law banning sale of pork from animals not housed according to certain standards

A U.S. federal court judge for the District of Massachusetts on Thursday signed a court order approving an agreement to delay enforcement of a state law that would have banned the sale of pork that comes from animals not housed according to the state's prescriptive housing standards. A coalition led by the National Pork Producers Council (NPPC), with the National Restaurant Association, and several New England restaurant and hospitality associations filed suit seeking to stop the law’s impeding implementation. The suit also asks the court to find the law unconstitutional.

NPPC comments: “This is a significant outcome as NPPC continues to push to preserve the rights of America’s pig farmers to raise hogs in the way that is best for their animals and maintains a reliable supply of pork for consumers,” said Terry Wolters, NPPC president and owner of Stoney Creek Farms in Pipestone, Minnesota. “The impact of Question 3 would have been particularly harmful to those in surrounding New England states who did not have a vote in the 2016 Massachusetts referendum, nor any notice of the dramatic steps that activists had taken trying to force these harmful initiatives on voters in other states.”

Details: The state law, known as Question 3 (Q3), was a 2016 Massachusetts ballot initiative set to go into effect on Aug. 15, 2022. Q3 is similar to California’s Proposition 12, which is currently being reviewed by the U.S. Supreme Court and would ban any uncooked whole pork meat sold in the state that does not meet specific sow housing requirements, regardless of where it was produced. Going further than Prop 12, the Massachusetts law would not allow the transshipment of whole pork through the state jeopardizing an estimated $2 billion worth of pork that moves into neighboring New England states.

The office of Massachusetts Attorney General Maura Healy and the coalition came to a “commonsense agreement” that the Q3 rule prohibiting sales of non-compliant pork should be put on hold at least until 30 days after the U.S. Supreme Court issues a ruling in the lawsuit brought by NPPC and American Farm Bureau Federation to Proposition 12. This agreement is limited to only the pork sales provision of Q3, and producers located in Massachusetts are still required to comply with the in-state housing standards.

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

October lean hog futures--$95.575 to $101.65, and with a sideways bias

September soybean meal futures--$425.00 to $468.10, and with a sideways bias

December corn futures--$5.87 1/2 to $6.42 3/4 and a sideways-lower bias

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

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