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Hog Complex May Offer the Most Surprises Heading into 2019

You probably heard about the African Swine Fever outbreak in China and how it’s now linked to at least 23 cases in eight different provinces. This is a BIG deal. And it’s a story that might gain more traction in the months ahead since the Chinese are having a difficult time controlling the outbreak, in spite of best efforts.

China is currently the world’s largest pork producer, and actually accounts for HALF of global production. For 2018, its pork production was estimated to be near 54 million tons. Compare that with U.S. production of 12 million tons. Some feel that China will lose potentially 10% of its herd due to this outbreak, which kills infected hogs within 10 days. And make no mistake, this fever affects ALL hogs at any age. This is different than the PEDv virus the United States dealt with in 2014. We lost 6 to 8 million baby hogs due to that, but NOT breeding stock/sows. The African Swine Fever is killing breeding stock in China, so it may take longer than normal to recover from this outbreak.  

Unlike our trade spat with China regarding soybeans, China has already said it will import hogs. China consumes more pork than the rest of the world combined. It is a staple in their diet. The bottom line is that this will be supportive for U.S. hogs going forward for the next several months. At this time, it is nothing that should make the market rally leaps and bounds higher, but the potential extra demand on the U.S. market for pork exports to China should keep prices well supported. Watch U.S. pork exports very closely over the coming months, and continue to monitor the outbreak progression of Swine Fever as well. Let’s hope it stays in China, and doesn’t exit the country and contaminate the rest of the world.  

If you have questions, you can reach Naomi at nblohm@stewart-peterson.com.

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results.Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2018 Stewart-Peterson Inc. All rights reserved.

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