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Sixth Week of Strong Hog Export Sales

The week’s hog slaughter will total 2.151 million according to USDA’s Friday estimate. This would be under our 2.160 million morning estimate. This would be 3.1% over last year. The previous six weeks ran 3.7% over last year. Thursday’s Actual Slaughter report noted no change in barrow and gilt weights (market hogs) at 211 lbs. This weight is 1.9% over last year. USDA’s weekly hog production estimate was pegged at 459.8 million lbs, 3.3% over last year. The previous six weeks have averaged 5.4% over last year.

There are a few numbers pushed in to next week's kill, based on the East Coast storm. That won't stop the trade's bullish bias but it may slow things temporarily.

Weekly pork export sales of 5,273 tonnes were noted this morning. Though it was the lowest week of the entire 2017 season, it should entirely be expected to be low. This covered the Christmas week. In fact, we could counter by saying these were fantastic sales for this specific week. Last year during the Christmas week they were only 283 tonnes! This now makes it six weeks in a row of great pork export sales. For this week, South Korea was a bit player with only 200 tonnes purchased. South Korea is seen as the rising star right now for our exports due to both bird flu findings and the Olympics on February 9.

Through today's morning report, cash hogs will have picked up 6.13 for the week. Cash pork, through Thursday's trade, will have only gained 0.48.

The best example of the trade's bullish hopes here are the deferreds. April closed just off yesterday's close, the highest of the year, and June saw net another new high posted today for the uptrend.

The pork market is doing slightly better than expected in recent days due to that bullish Cold Storage report from the 26th, good exports, and the fact we won't have burdensome hog numbers until second half 2018. At these prices we are turning from slightly bullish to neutral.

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Rich Nelson
Allendale Inc. 
815-578-6161
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