Weekly Pork Export Shipments Strong
By Dennis Smith
Follow me on Twitter @denniscattle
Thursday October 31, 2019
Cutting to the chase, weekly export sales and shipments were solid for U.S. pork last week. Sales came in at 30,100 MT with Mexico by far the largest buyer, taking 16,900 MT of product. Japan and S. Korea took 2,700 MT followed by Canada (2,300) then China (1,900) and then Colombia taking 1,300 MT. Shipments were large at 32,500 MT with China the largest receiver of U.S. pork, taking in 10,200 MT. Mexico was a large shipper as well, taking in 9,100 MT. Shipments for China were a weekly record with the exception of the one week in which the data was accumulated. Australia reached out and booed 4,600 for delivery next year with South Korea booking 1,100 for next year. Also in the news, as reported by Reuters, the head of a trade association backed by the Chinese government indicated the best way to proceed with the phase one trade agreement including the commitment to purchase up to $50 billion worth of U.S. agricultural products would be to drop the tariffs and allow companies to purchase product depending upon market forces. This represents the first direct hint that the tariff on pork is about to go away. Consider this development quite bullish for lean hog futures. Look for a steady to higher open likely followed by a strong close. The near term concern, with early winter weather, is keeping hogs from getting backed up.
Volume in LC futures yesterday was large at 76,300 with open interest surging higher by 7,100. Open interest is now pouring into LC futures as if a light switch had been thrown. In my opinion this buying is dominated by the funds which are building a long position. Weekly beef sales were average at 15,700 MT with Japan and South Korea both large buyers. Shipments, at 14,600 MT, were down 9% from the 4-week average. There’s nothing impressive, nothing really bullish in this information. Much higher volume of trade at these “high” price levels, the fact that cash steer prices in the south are now even with cash prices in the north and a possible top in the choice/select spread are three warning signs of an impending top. Resistance can be expected in the 11950-12000 range in the front month Dec.
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