Contributing to the volatility, especially in the ham sector, has been excellent demand for hams and reduced output due to far fewer butcher hogs coming available than expected. Pork export demand has been record high this year. In September, recent data confirmed that pork exports were up 17% compared to September of last year.
On Nov. 5, the ham primal used in the cutout calculation, was priced at $98.36. This level is not only a 52-week high but the highest level I show for this primal (in November) going back 10 years. Looking at individual ham cuts, the 23/27-pound bone-in ham was quoted at 76 cents per pound on this date. The 23/27 boxed ham was priced at $1.02.
Adding fuel to the fire is the fact that production is running short of expectations. The most recent Hogs and Pigs Report projected hog slaughter during October to run 110% of last year. Instead, the actual kill was about even with the year prior. The report went further to project the kill during November should run at about 106% of last year. Again, the kills have instead been running up only about 1%.
As expected, the October hog contract went off the board strong, expiring at $78.42. Following this expiration December hogs, trading at a substantial discount, shot upward to just above $72 but has since pulled back. The recent range of consolidation has been between $67.50 on the top side and $64.50 on the lower side. Eventually, say by the end of the week ending Nov. 14, I'm expecting December futures to resume their uptrend and likely expire strong on Dec. 14. This could take the December to where October expired, $78.50 or possibly higher.
Germany may be only days away from discovering African swine fever in their commercial hog herd. If/when this happens, large scale culling will likely have to occur. Despite what the Chinese are telling the world, the fact is the Asian hog herd has been devastated by ASF and it will take time, more time to recover and rebuild the herd. In the short term, say over the next two months, China is expected to import vast quantities of pork ahead of their lunar New Year holiday that cranks up in February.
I was honored to be part of theNational Hog Farmer Global Hog Industry Virtual Conferencelast month. As I mentioned during the conference, I publish an evening livestock wire for my clients. Producers can take a look at this report on a free 30-day trial. The trial also includes a morning livestock report and midday pork and beef update. If interested in the free trial, simplysend me an emailrequesting such.