However, there are now strong levels of technical support just below current futures market prices, which could cause the market to bottom. Bulls can also argue that still-high US beef prices at the meat counter and good export demand for US pork will keep bottoming under the US lean and US spot pork markets, and even encourage higher prices. price until the end. of the year.
Latest News From USDA And Others Regarding The Global Pork Industry
US pork exports down in last week of reporting
The USDA said Thursday that US pork net sales of 25,300 tonnes for 2021 were down 25% from the previous week and 9% from the previous 4-week average. The increases mainly concern Mexico (5,800 MT, including decreases of 500 MT), the Dominican Republic (3,500 MT, including decreases of 100 MT), Japan (3,100 MT, including decreases of 100 MT), Canada (2,700 MT, including decreases of 400 MT) and China (1,800 MT, including decreases of 100 MT). Exports of 25,800 tonnes were down 11 percent from the previous week and the previous 4-week average. The destinations were mainly Mexico (8,400 MT), China (3,700 MT), Japan (2,600 MT), the Dominican Republic (2,300 MT) and Chile (2,000 MT).
USDA Annual Livestock Summary for the European Union
The EU pig sector is competitive but dependent on Chinese demand. As EU market leaders continue to increase production (i.e. Spain, Denmark and the Netherlands) and production picks up in Italy, France, Belgium and in Poland, EU pig slaughter and pig production are expected to increase further in 2021. While exports to China and the UK are down, exports are increasing to other Asian markets (for example). example, the Philippines and Vietnam) which should largely offset the reduction in exports to China. However, in 2022, EU pig production is expected to decline due to lower carcass prices and the threat of further outbreaks of African swine fever (ASF) in central Europe. Until now, EU exports have been able to compete with other net producers thanks to producer flexibility and control of the production chain. However, the current market situation is fragile given the EU’s dependence on the Chinese market. To reduce its dependence on the Chinese market, the EU pork sector aims to control the expansion of production and continue to diversify its export markets.
An increase in slaughter is expected in the main pork producing countries except Germany. Strong sow stocks coupled with the expectation of further improvements in fertility rates are expected to result in another record-breaking piglet harvest for the EU in 2021. The pig harvest is expected to increase more significantly in Spain, France, Denmark and Poland. Piglet production is also expected to increase in Italy, anticipating a recovery in demand for dry and cured meat products. However, significant reductions are planned in the Netherlands and Romania. A reduction in stocks has taken place in the Netherlands as the Dutch government has put in place a buy-back program to help reduce agricultural nitrogen emissions.3 In Romania, sow stocks are expected to decline as farmers are cautious facing ASF. 4 Bulgaria, however, is said to have made progress in its recovery from ASF. 5 Despite numerous calls from the European pig industry, the draft EU policy to ban pig farming on backyard farms is still underway. waiting. An increase in the number of piglets to be slaughtered in the second half of the year is expected, mainly in Poland, Spain, France, Denmark, Belgium and the Netherlands. The high slaughter in the Netherlands and Belgium is mainly the result of reduced exports of slaughter pigs to Germany (due to ASF and its impact on German pork exports). In the first half of this year, official EU slaughter increased by 3.45%.
Profit margins are expected to reduce piglet production and slaughter in 2022. In early summer 2021, improving market conditions were negatively affected by declining Chinese demand for pork and high feed prices. for animals. In 2021 and 2022, Chinese pork imports are expected to remain below the level reached in 2020 (for more information, see FAS Beijing’s Livestock and Products Annual, published on August 26, 2021). The erosion of profit margins for fattening has also weighed on piglet prices and is expected to negatively affect piglet production. Under current market conditions, sow stocks are expected to fall to a record 11.15 million head in 2022. Significant reductions in sow stocks are expected in Germany, Poland, France and the Netherlands. The German pig sector was already under pressure before 2020, but with the outbreaks of ASF in the wild boar population, the situation worsened. Even in Spain, which has shown steady growth in slaughterings since 2013, slaughter levels are expected to stabilize. The Spanish sector is aiming for a controlled expansion with investments to improve sustainability. The exceptions are France, Italy, Portugal, the Czech Republic and Hungary, which are still recovering from the significant reductions made in 2020. A decline in Polish slaughter is also expected after an increase in 2021.
USDA Annual Report on Livestock in Canada
The Canadian hog herd is expected to contract from 2022. An increase in the number of sows will lead to a growth in the 2022 hog harvest compared to 2021, as Canada adds additional finishing capacity and sees greater use of sows. slaughter capacity and additional investments. As a result, slaughter will increase modestly in 2022. Live animal exports will decline in 2022, as Canada recently resolved the labor dispute in eastern Canada, which has seen more than four months of disruption in the capacity of processing, which resulted in more market and feeder hogs coming to US facilities. Despite the increase in slaughter, pork production in 2022 is expected to decline by 2%, as disruptions from COVID-19 and resolved labor disputes will reduce the number of pigs on standby. As a result, carcass weights will be lower in 2022. Pork exports will remain stable from 2021 volume with continued global demand due to the continued impacts of African swine fever (ASF) in several regions. Imports will increase due to lower production and to support the preference of Canadian consumers for certain cuts.
The likely high-low price ranges for next week:
October Lean Pork Futures – $ 78.00 to $ 86.00 and with a higher lateral bias
December Soybean Meal Futures – $ 330.00 to $ 355.00, and with a sideways bias
December Corn Futures – $ 5.15 to $ 5.50 and higher sideways bias