As Exports Impress, Can Lean Hog Prices Push Even Higher into 2021?

As the hunger for pork continues to grow, China is leading the charge and helping push hog futures to eight-month highs. Can the price momentum last into the New Year? Iowa State's Lee Schulz weighs in. ( Reuters )

Pork exports continue to be a positive story in 2020. As the hunger for pork from other countries continues to grow, China is leading the charge and helping push hog futures to eight-month highs.

“China is really driving that right now, and I think why you're seeing the demand side really pull those futures prices higher, especially with all the uncertainty about the supply situation,” says Lee Schulz, Iowa State extension livestock economist. “I think it's expected. We have tighter supplies, but demand is driving where we're seeing prices in 2021, potentially.”

China’s strong appetite is a leading factor, as African swine fever (ASF) cases in Germany could cause EU’s pork exports to China taper off. That could also be another boost for U.S. pork exports.

All of this comes as the latest Chinese government statistics show China is rebuilding its sow herd, after ASF decimated its herd the past few years. The Ministry made clear its goal is to hit pre-ASF levels of 43.9 million head by the end of 2020, and is currently building the infrastructure to help reach those levels.

“I think you have to believe the rebuilding and expansion action is taking place,” says Schulz. “I think we're seeing expansion in China. Prices would certainly dictate it should be occurring, but I think their actual ability to bring that to fruition is a different question.”

The Ministry quit releasing monthly swine reports in 2019, so economists say it’s difficult to know what the actual herd numbers are today. The export signs show China still needs pork, and Schulz says as long as that continues, demand could spur futures prices to could continue to push higher into 2021.

 

 
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