Rock Island Today

WKEI AM 1450 recently issued the following announcement.

Hog farmers welcomed the return of profitable prices in recent months after a tough start to the year.

But many wonder how long the good times will last amid rising feed costs and continued uncertainty on the trade front, which accounts for more than one-quarter of pork sales.

“As we watch the hog trade, we’re starting to see the deferred months (prices) sneak back up there to highs we’ve been at once, already,” Toni Dunker, market analyst with Advance Trading in Quincy, told the RFD Radio Network.

“It gives producers a good opportunity (to hedge) further out,” she noted. “But it would sure be nice to see the cash trade and nearby pork product value move higher. That’s what we need to see.”

Iowa State University’s farrow to finish monthly hog returns indicate profitability for farmers the past four months, with June returns up to an average of $32.17 per head.

The national average base hog price jumped from an average of $58.27 (carcass basis) per hundredweight in the first quarter, the lowest level since the fourth quarter of 2016, to $78.86 in the second quarter, the highest since the fourth quarter of 2014, the CME Group’s Daily Livestock Report noted.

The recent positive returns were much needed for hog farmers, who had not posted a profitable return the previous eight months.

Traders believe at least some of the uptick in hog prices resulted from potential U.S. pork exports to China as Chinese hog farmers continue to deal with significant herd losses due to African swine fever.

But U.S. pork shipments to China had not ramped up significantly as of last week, thus leaving the market and farmers in a position of uncertainty.

“From a demand standpoint, we’re still waiting for bigger and bigger numbers,” Dunkner said. “I can’t say enough how important trade is to all ag commodities.”

China in recent months increased pork purchases from Europe. It at least opened the door for U.S. pork exports to other destinations.

U.S. pork exports in May totaled 217,999 metric tons, steady with last year’s pace and up 1% in value to $567.8 million, the highest monthly value total since April 2018.

Overall, U.S. pork exports the first five months this year slipped 4% in volume. But the value of pork exports reached $54.83 per head in May, the highest monthly average price in a year, the U.S. Meat Export Federation reported.

Looking ahead, hog farmers need steady pork demand and strong prices to help offset a recent run-up in feed costs.

“As hog producers grapple with changing feed input costs, the prospects of higher production and continuing trade issues, managing input costs becomes critical,” authors of the Daily Livestock Report noted.

USDA previously estimated the inventory of hogs and pigs in the U.S. in June at a record 75.52 million head, up 3.6% from the previous year.

Original source can be found here.