Chinese Pork Prices Surge Higher in November By Dennis Smith
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Tuesday December 10, 2019
There’s headline news just out from the WSJ that China and the U.S. are expecting a delay in the implementation of higher tariffs beyond the Dec 15th deadline as both countries attempt to force a phase one trade deal. This news flash turned stocks from lower to higher. Reports from overnight indicated that Chinese pork prices were up 110% compared to November of last year. Prices in Oct were up 101%. So those predicting that the worst is over for the Chinese have some explaining to do. The inflation rate was pegged at 4.5%, (eight year high) well above the government target. The communist government realizes that food inflation creates a very dangerous situation for government officials. Closer to home, cash is called fully steady to higher which is impressive in the wake of the huge, record large kill last week. It’s my belief that we’ve been aggressively pulling hogs ahead. This could/should result in a dramatic drop off in butcher supplies early next year.
The negotiated volume of trade from last week was larger than expected at 95,300. Purchases for spot delivery surged by 35%. In addition, thanks to more cattle available in NE, the show list is substantially larger, estimated at 242,500 compared to 228,000 last week. Beef is expected to continue working lower. So the table is set for a downward correction in futures which started yesterday. Last week’s kill was huge at 679,000 which represents the largest weekly harvest since the third week of June in 2011. Weakness in the bull spreads was clearly evident yesterday. There was a larger run of feeders at OK City with prices lower. We’re looking to cover some hedges in the Dec, Feb and Apr and we’re looking to step into bull spreads.
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