The USDA released February’s Livestock and Meat trade statistics earlier this week. Highlights for this report were released as a separate report. Generally, we see the Pork, Beef and Turkey trade was disappointing. Broiler and Turkey exports still appear to be impacted by last summer’s Avian Flu outbreaks. Several nations banned U.S. Poultry imports and likely have not yet lifted them.
The April Lean Hog futures contact will expire next week. We recommend traders should already be out of the April Lean Hog futures or exit next week to avoid getting a delivery notice. We would avoid rolling into the thinly traded May contract. This week, April Lean Hog futures were in a downtrend all week but continued trading at a premium to Spot Hog prices. The more deferred June and July contracts however trended upward most of the week.
During February, U.S. Pork Exports slipped below 20% of the F.I. Pork Production and Beef Exports slipped below 10% of the F.I. Beef Production. We see this as a disappointing performance and provide additional meats for Domestic availability.
During February the U.S. Pork exports were reported at 386,833,000 pounds, carcass weight. This was 87.6% of a year earlier level.
Given the fairly low domestic Pork prices, we are disappointed that Pork Exports were not greater than the 386,833,000 pounds shipped, at only 87.9% of the previous year’s level. Mexico received the largest Pork tonnage from the U.S. at nearly 31% of the total during February followed by Japan and Canada.
WEEKLY HOGS/PORK SECTOR STATISTICS:
- This week, the F.I. Hog slaughter rate was slightly below the previous week and appears to be tightening seasonally.
- The week’s Preliminary F.I. Hog Carcass weight was unchanged at 213#, fractionally below a year ago.
Daily April Lean Hog Futures Bar Chart:
The April contract continued trending lower this week, handily breaking below support since February and March. Since the April contract is approaching expiration next week. Spot Hog prices continue trading at a discount to the nearby futures contract. We recommend traders look to exit exposure in the soon to expire April contract but avoid the thinly traded May Lean Hog futures contract.
JUNE LEAN HOG FUTURES DAILY CHART:
The June Lean Hog futures contract gained most of the week. We expect the early week low will hold next week.
JULY LEAN HOG FUTURES DAILY CHART:
Mid-week, Wholesale Pork Markets ticked higher:
Mid-week the AMS/USDA Wholesale Composite Pork Carcass prices continued firming being reported at $77.88 per cwt. compared with the previous week at $77.59 vs. a year ago at $65.64. Seasonally, the Composite Pork Carcass values tend to move sideways to lower for the next few weeks before beginning to advance to late spring highs.