Focusing On ASF and China? Analyst Says to Look at Domestic Herd

Lean Hogs Market 110619

Most lean hog contracts traded in the red Wednesday. It’s just one example that the market has been a rollercoaster.

“It’s been a difficult, difficult run,” said John Payne of Daniels Trading.

However, most producers look at two different stories to figure out price.

The first is African Swine Fever (ASF). The second thing is the possibility of a Chinese trade deal.

“China is the biggest producer of pork,” said John Payne of Daniels Trading. “They are the biggest end-user of pork. They are also the biggest grower of pork. As we know, their herd is down.”

However, producers may want to look at what’s going on domestically, too. Payne says the U.S. domestic herd is a different story with increasing expansion.

“I think from someone who has to manage risk, the risk is there,” said Payne. “We are seeing feeder pig prices in Northwest Iowa and in the Dakotas bare bones which is telling us there is no place to put these things.”

Payne says U.S. producers have expanded so much that it’s pushing summer prices “at the highs they were a year ago already.”

“We are seeing the front-month [contract] spill off into the lows,” said Payne.

“[The slaughter numbers] are at 2.5 million [hogs] a week to 2.7 million [hogs] a week, that is bringing on a lot of supply and somebody has to buy that and the U.S. consumer is not,” said Payne.

Payne says U.S. hog producers are seeing massive exports, but the cold storage numbers for pork are down year-over-year.

Click here to watch the analysis on AgDay.