Fresh News Regarding African Swine Fever in China

by Archer Financial Services | Mar 28, 2019

by Dennis Smith
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Cash was sharply higher yesterday and called higher again for today. We’re hearing that packers are hunting/searching for hogs for next week. Smithfield is expected to begin processing and shipping huge amounts of pork for China next week, according to my sources. This is causing real havoc in the negotiated market. This is also just the beginning. Pork export sales were posted at 21,500 MT with Mexico, Japan and Canada the big buyers. Mexico took almost half. China was not in our market last week but in the shipments they received 4,400 MT…paying the 62% tariff. Total shipments last week were 27,500, a solid number. Yesterday’s volume was 57,100 with open interest down less than 1,000 cars. A story has surfaced from Reuters that Shandong province in northern China, which produced 41 million pigs in 2017 (7% of total production), has just reported a 41% drop in breeding herd inventory during the Aug-Feb period. In addition, this province has only reported one case of ASF. This demonstrates the magnitude of the problem in China and it confirms that cases have been severely under reported. Just the losses in this province alone, if accurate, is a bullish story. Look for the rally in lean hog futures to likely resume in force today ahead of the hog & pig report. The trade is expecting a 102% kept for breeding inventory today. I suspect there could be a bullish surprise on this report. Producers lost money for seven consecutive months going into March. Lending capital dried up as well.


Packers bought cattle in the south yesterday first at $1.26 and then at $1.25. The northern market is higher with trade reported in NE at 126-129 and in IA from 127-129. The beef was mixed but on Tuesday the choice cutout marked a new recent high. Springtime demand has not surfaced yet but it will. I subscribe to the theory that the rising tide will lift all boats. I’m clearly bullish hogs and if hogs/pork is going to stage a major rally in the weeks/months ahead cattle/beef won’t drop hard, just prior to the best demand timeframe of the year. Weekly beef export sales were sluggish at 13,000 MT with shipments at 14,900 MT. LC futures volume was 72,700 with open interest down 4,700 contracts. Open interest in the Apr LC was down nearly 6,000. We found it interesting that FC barely edged lower yesterday despite the aggressive selling in LC futures.

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