
Pork Commentary, September 16th 2019
Jim Long, President-CEO, Genesus Inc.
Last Monday, December Lean Hog Futures were 59.72₵ lb. On Friday, 5 days later, they closed at 68.70₵ lb. That’s a 9₵ lb. increase or about $20 per head in 5 days.
It’s a Wild Ride!
It seems our daily emotions go up and down with the lean hog futures. Since mid April, December lean hog futures have traded up and down in a 30₵ lb. range (89.8-58-77)
It’s nuts. One day things look good-next day- What the heck?
China
It’s all about China!
Daily, we watch the China market price? What are tariffs?
How much pork is being exported to China?
This past week the market benefited from some positive talk on USA-China trade negotiations. Also, from the China announcing they would not add more tariffs on U.S. pork.
Pork net sales to China last week of August were 10,880 metric tonnes, the highest since May. (our simple arithmetic: one tonne is 2200 lbs/200 lb carcasses = 11 hogs per tonne meaning 10,880 metric tonnes ~ 120,000 hogs equivalency.)
U.S. Export Meat Federation
Year to date Accumulated Pork export
January 1 to September 5
| Country | YTD 2017 | YTD 2018 | YTD 2019 | YOY |
| Total | 733,193 | 758,128 | 871,288 | 15% |
| Australia | 24,239 | 26,752 | 34,498 | 44% |
| Canada | 51,816 | 56,113 | 55,485 | -1% |
| China | 49,984 | 20,999 | 183,409 | 773% |
| Columbia | 23,713 | 34,563 | 36,923 | 7% |
| Hong Kong | 42,992 | 34,564 | 32,144 | -7% |
| Japan | 128,009 | 126,277 | 100,191 | -21% |
| Korea | 82,425 | 117,727 | 102,965 | -13% |
| Mexico | 270,080 | 278,227 | 247,225 | -11% |
There have been 35 weeks since January 1 to September 5.
China has averaged just over 5,000 tonnes of imports per week from USA since January 1. Going forward that’s a number to watch- a bump to 10,000 tonnes per week is doubling sales.
What we need is to send 20,000 tonnes a week (240,000 hog equivalency).
With what is going on in China with total lack of pork supply, it’s a reasonable number if tariffs could get lowered.
Last Week:
- China Average price 27.62 rmb – $1.76 U.S. lb. liveweight or 270-pound hog = $475 U.S. head.
- USA Average Price 53-54% lean 58.81 = 202 lb. carcass = 270 liveweight = $118 per head
That’s a difference of $357 per head between China-USA last week . With that price spread you’d think there will be lots of buyers wanting Pork in China.
Other China News:
The China Ministry of Agriculture and Rural Affairs monitors 400 counties for pig production. In July the number of pig inventory fell by 9.4% month on month from June. Number of sows decreased by 8.9% from June.
The sow number decrease would between 2.5 – 3 million sows. The pig inventory down 30 million head approximately. This is in one month! ASF is far from under control in China.
The two largest pig companies in China are Wens and Muyuan. They released their sales for August.
Wens:
- 1.173 million market hogs sold in August.
- A decrease of 34% from July. A decrease of 42.68% from August last year
Muyuan:
- 711,000 market hogs sold in August.
- An increase 4.6% from July, but down 36.86% from August a year ago
The numbers from the two largest swine companies in China reflect in our opinion, the reality of China’s ASF issue

GENESUS CUSTOMER TESTIMONIAL
We made a promise, to deliver results…and we did!
TQLS (China)
‘‘The main reason for TQLS to choose Genesus as our genetic supplier is because Genesus’s many years professional expertise and experience in swine breeding.
Genesus can help our company to improve the production efficiency, also Genesus has been focusing on meat quality selection for over 20 years, which can help us to provide better quality pork to Chinese consumers.
The breeding pigs from Genesus Nucleus herd helped us to increase the litter size by 2 piglets per litter, and reduce cost of gain, while the finishing time is reduced by 10 days.’’
– testimonial received from TQLS representatives.





























Hope – A Pre-requisite to be a Hog Producer!
The U.S. hog market has shown some life in the last week with lean hogs gaining about 5₵ lb., getting close to 60₵. But what is there to say. Current prices mean a $15- 20 U.S. per head loss. It’s not a pretty hog market for producers.
It’s once again good to be a packer. One estimate we read had Packer Kill and Cut Gross Margin at $22.00 per head. Currently with 6% more market hogs compared to last year, packers have lots of options. No one pays more than they have too.
Last week the U.S. Hog marketing’s were 2,669,000 up 169,000 from a year ago. The huge numbers of hogs have led to the finishing capacity to be maxed out. We expect current market numbers are far greater than the current small pig placements. This in itself is beginning to create finishing space.
The lean future market reflects the expectation of less hogs and greater demand, Friday with October 62.40; Feb 74.47; and April 81.50.
Last week in conversations with different industry veterans, they all commented on the negative attitude in our production base. Many producers wonder what the future is. They have lost money. They see the trade war hitting swine producers and them being sacrificial lambs for the bigger picture. This is in both the USA and Canada.
This concurrently with the real hope that a trade agreement can be made to fill the cavernous hole ASF has created in China’s production base.
China
Rabobank- the world’s largest Ag lender reported last week that China’s pork production will fall by 10%-15% in 2020, on top of the 25% drop in 2019. Rabobank also expresses the opinion that China Pig herd has decreased by half in 2019 and is still falling.
We agree with Rabobank’s sentiment on where the China pork and hog supply is heading from our own observations in China.
What you really have to ask, what does a further 10-15% drop in pork production do to China’s hog prices?
Currently, China’s average price is 28.52 rmb/kg or $1.81 U.S. liveweight a lb. (a 260 lb hog-$470 U.S.). A further 10% drop is at least one million fewer market hogs a week on top of the current market hog supply.
It’s mind boggling. How high can prices go?
The pressure to import pork will be even greater as every week China’s hog and pork supply declines.
This week new trade discussions between the U.S. and China resume. Maybe some resolution that benefits U.S. hog producers? There is hope. Hope is necessary pre-requisite to be a hog producer.
JBS USA
Last week JBS – The second largest packer group in U.S.A. (93,000 per day capacity), announced they will now stop accepting swine fed Ractopamine (paylean), a growth promoter. China will not accept Pork fed Ractopamine. In our opinion this is a clear signal JBS is getting themselves in a position to sell large quantities of pork to China.
Smithfield Foods – the largest U.S. packer (130,300 per day capacity) has already banned Ractopamine usage.
Combined Smithfield and JBS at 213,000 per day are over 40% U.S. total packer capacity.
Last week, Dr. Steven McOrist wrote an article in Pig Progress on ASF. In Southeast Asia he estimates a drop in production from ASF – 30% on commercial farms and 80% of backyard farms.
If you add up the estimate he made for decrease in the expected supply in Southeast Asia- Viet Nam, Myanmar, Philippines, Thailand, Laos, and Cambodia, it comes to over 5 million metric tonnes. If close to correct, there will be a large increase in local hog prices and there will be increased pork imports to all these Southeast Asian countries. A further pull and demand on the U.S. hog market.
Summary
A major move for exports and the dog might not run out of chain for a long time.
Get acquainted with the
Global Mega Produce
A program of recognition led by National Hog Farmer sponsored by Genesus Inc.
CP Foods
CP Foods is recognized as a Global Mega Producer for 2019.
The Charoen Pokphand Group is a diversified transnational conglomerate that consists of three core businesses that operate in the agri-food industry, retail and distribution, and telecommunications, as well as involvement in 10 additional industries such as finance, real estate, pharmacy, etc.
CP Foods conducts business in more than 100 countries and employs more than 350,000 employees around the world. CP Group’s revenue from the agri-food sector totaled $5,6 million, with 65.6% coming from China and 34.5% from Thailand and Vietnam.In 2018, CP China produced 2.8 million hogs. However, in 2019, China was hard hit by ASF which is forcing big changes within the pork industry. CP Group have new plans for significant growth in China to help fill the void left by the shortfall in the countries production. Let’s all recognize CP Group on their role in the rebuilding of the pork supply in China and significant presence in the global food industry.
Mr. Bai Yufei – Senior Vice Chairman Agro-Industry & Food Business China Area, CP Group;
Mike Van Schepdael – Vice President, Genesus Inc.