U.S. hog futures soared to a two-month high on Monday on technical buying and the potential to sell more pork to China.
Traders are waiting for confirmation the Chinese are buying more pork, Reuters reports. China’s supermarkets are selling frozen pork from state reserves, and started doing so after pork prices surged prior to National Day festivities.
“There were more people buying (futures) in case of the Chinese buying or Asians buying,” Don Roose, president of Iowa-based broker U.S. Commodities, told Reuters.
December lean hog futures jumped 2.75 cents to 72.6 cents per pound at the Chicago Mercantile Exchange. Not only did the contract reach its highest price since July 31, it has increased 25% since hitting a one-year low on Sept. 10.
Large supplies are flooding the market. During the September Quarterly Hogs and Pigs Report, USDA announced the highest Sept. 1 inventory of all hogs and pigs reports since the estimates began in 1988.
A record market hog inventory will ultimately result in record slaughter.
Ron Plain, professor emeritus at the University of Missouri, said the industry is already experiencing some of that during a breakdown of the Hogs and Pigs Report on Friday.
For the week ending Sept. 14, the official inventory just came in at 2,632,118 hogs harvested, the second biggest week ever after Dec. 22, 2018. For the week ending Sept. 27, the preliminary hog slaughter total is at 2,646,000, up 14,000 from two weeks earlier, Plain said.
“We’re going to have plenty of hogs to process – lots of pork this fall – still more pork in the winter than a year ago, but not quite as burdensome as it might be in the next few weeks,” he said.
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