The 12-month profitability outlook is currently showing an average of $13.91 per pig. PLUS a Cargill Pig Flash market outlook
Fourth-quarter pork exports had a solid finish, according to the U.S. Department of Agriculture. Shipments of almost 1.7 billion pounds were roughly 1.6% higher than a year earlier, mostly on the strength of year-over-year larger shipments to Mexico and China. USDA attributed the shortfall to lower shipments to China and Hong Kong. The main reasons being a recovery in the Chinese pork sector as well as disruptions in the Chinese economy throughout the year, both of which had the effect of reducing demand for foreign pork. Chinese government data indicated that China’s 2022 pork imports declined by more than 50%, with all major pork exporters absorbing part of the steep reduction.January hog slaughter and pork production were higher than expected, although anticipated lower dressed weights are expected to mitigate the effect of the higher numbers on quarterly production, said USDA. First-quarter pork production was reduced 32 million pounds to 7.010 billion pounds, 1.5% higher than production a year ago. First-quarter hog prices are reduced $5/cwt. to $58/cwt. on general weak demand for pork cuts. The demand-side pressure, along with feed cost projections remaining flat to slightly lower through the first quarter of 2024, suggests the opportunity for producers to bank some profits becomes much smaller late next year.
Brazil has seen more progress on bean harvest, which could lead to corn getting in the ground at a faster pace and may allow for Brazil to be ahead of the five-year average on planting. Russia is currently in talks on what they are going to do about the grain corridor which expires in March. That agreement allowed three Black Sea ports to allow exports to be open. If that agreement is extended, or, for that matter, halted, the impact on the export market could be significant.It’s the same old stories in the soybean meal market with the Brazilian harvest, tight US supplies and strong export demand making the headlines. One thing to notes is that the market has been missing the commitment of traders report due to technical issues, which has left the market in the dark about the funds positioning. The distillers dried grains (DDG) market has begun to weaken in the West while the East remains firm due to supply constraints, according to the Cargill pork team. The Northeast continues to battle production constraints as ethanol production has decreased across Ontario, New York, and Pennsylvania, leaving the DDG supply extremely tight across the region. The result has been an increase values up $5-15 per ton. From the revenue side of the equation, current lean hog futures prices suggest hog prices going into the red late in the fourth quarter and remaining there into early 2024, before seeing a return to profitability a year from now. The 12-month profitability outlook is currently showing an average of $13.91 per pig. Thinking about your summer strategy? Make plans to join Feedstuffs and Cargill on Thursday, April 13 for a special webinar, titled: Are you ready to implement summer diet and marketing strategies? The webinar will take a look at how the profitability outlook can impact your summer feeding strategies and the importance of being able to change strategies quickly. Don’t let summer catch you off guard.
