China’s Pork Prices Continue to Rise
Retail pork prices are up 84 percent, year-over-year, as of early October.
The shortage of hogs primarily due to African swine fever is the cause.
The market looks for pork prices to continue to rise in the coming weeks.
Prices of other proteins are higher, year-over-year as well.
Chicken is up 23 percent, mutton is up 20 percent, beef is up 19 percent.
According to China’s foreign ministry, calendar year to date, China has purchased 700,000 tonnes of U.S. pork.
China’s pork imports from January to September totaled 1.3 million tonnes, up 44 percent from last year.
FBN’s Take On What It Means: China is expected to continue to have historically large imports of protein given the reduction to its hog herd. However, the total volume of imports remains light compared with its total consumption. U.S. producers are poised to continue to benefit from the ongoing rise in pork purchases as the ease of China’s pork prices in the near term is unlikely.
MFP Refresher with November Around the Corner
USDA’s 2019 Market Facilitation Program (MFP) payments have started.
The initial payment was 50% of the total eligible payment (or $15 per acre if the initial payment fell shy of $15).
As of September 30, FSA had paid out nearly $5.2 billion in 2019 MFP.
The top five states were Iowa, Illinois, Minnesota, Nebraska, and Kansas.
A second payment (an additional 25% to bring the total up to 75%) could be possible in November followed by a third in January.
USDA’s language around payment information does not lead to any definite conclusion about whether the second and third payments will be made.
USDA’s statement is that future payments are conditional upon “market conditions and trade opportunities”, to be determined by the CCC.
FBN’s Take On What It Means: There is a possibility that producers will receive all of the eligible payments. With the second potential payment in November and no formal trade agreement in place to ensure exports pick up to pre-trade war levels, MFP round two could be on the way soon. Producers are encouraged to sign up for payments and have until December 6, 2019 to do so.
The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)
