Phase one was signed yesterday. Buy bigger tractors. Well, I’m not so sure about that but things in the pork industry, anyway, should get better from here. The industry is suffering from gross, negligent over production. The kills over the last 15 weeks have averaged 6% greater than the same period last year. Evidence is becoming quite clear, however, that Chinese imports are starting to accelerate. First confirmation was achieved last week when Nov exports were revealed. This week data out of China confirmed that their December imports soared by more than 60% over the Nov pace. Weekly export sales this morning, for last week, were excellent at 38,700 MT. Mexico was a huge buyer of U.S. pork last week, booking 19,200 MT, seemingly locking in prices and front-running the Chinese. Japan was second at 6,200 followed by Canada which booked 4,600 MT. South Korea booked 2,400 followed by China at 1,900 and Vietnam made, perhaps their largest purchase ever, taking 1,000 MT of U.S. pork. China dominated on the shipments having received last week 16,000 MT, a new high for them. Mexico was a close second receiving 12,000 MT of pork last week. Cash is called steady which is likely not accurate. Look for higher cash. IPC, Indiana Packers announced they’ll be racto-free on April 1st and I’m hearing that Routh packing, out of OH will be racto-free on May 1st. I expect a rally but it likely won’t occur until the product jumps and moves upward and through $83.00. Current carcass values reside at $74.65.
Beef export sales were pegged at 17,800 with shipments measured at 17,400. Good numbers. The trade is attempting to determine where the cash steer trade will land this week. My guess is steady to higher and my guess is that futures resume their uptrend. Yesterday’s volume was 72,000 with open interest pouring into the market, rising by 3,100. Phase one should support the beef. Look for a mixed early trade followed by a rally.
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