The lean hog futures market received a boost today due to the wintry weather in the central US, which is expected to restrict hog transportation to packing plants. The Midwest was hit with heavy snow on Monday and today, and there is another storm forecasted for late Thursday into Friday. The region is expected to experience extreme cold early next week. Although the initial market reaction to the winter weather appears bullish, hog supplies will likely be backed up in the next couple of weeks.
The lean hog futures market today saw short covering and bargain hunting by speculators.
Lean hog futures bulls were encouraged by the fact that February futures are holding a premium to the cash index. The latest CME lean hog index is down 11 cents to $65.74 as of Jan. 5. The preliminary calculation for Wednesday puts the cash index up 9 cents to $65.83, giving further confidence that a seasonal low could be in place.
It has been officially declared that California’s Proposition 12 has become a law
Voters in California approved Proposition 12 in 2018, enacting stringent laws that prohibit the sale of food items made from farm animals that are not raised in compliance with certain guidelines. Animal activists’ more than six years of political work have culminated in this law. To give non-compliant pork time to exit the supply chain, the pork provisions of Prop 12 were first postponed, even though the rules for eggs and veal had already taken effect. Only complying animal products will be allowed for sale in California as of January 1, 2024.
The pork industry opposed Proposition 12 and took the legal battle to the Supreme Court, which ultimately ruled that states have the authority to restrict meat sales.
The USDA modified a weekly report on hog marketing to show the premium that was being paid for hogs raised in compliance with “animal confinement legislation,” such as Prop 12. In late December, the premium was an average of $4.92 per 100 pounds.
Since the passage of Proposition 12 in California, 14 other states have enacted similar laws.
The cases of African swine fever are increasing in the European Union.
In 2023, African swine fever (ASF) spread to five new European countries, according to a report by ISN, the interest group for pig production in Germany. The total number of cases across the European Union (EU) has almost doubled compared to the previous year, with a total of 12,121 outbreaks. Wild boar ASF cases in Europe have slightly increased and Poland continues to be the most affected country.
The virus has entered Greece, Croatia, Kosovo, Bosnia-Herzegovina, and Sweden, with outbreaks occurring for the first time in domestic pig herds in Croatia and Bosnia-Herzegovina. Bosnia-Herzegovina registers the highest number of cases with more than 1,500, followed by Croatia with more than 1,100 affected domestic pigs, Serbia with more than 900 cases, and Romania with more than 700 cases. The total number of ASF outbreaks in Europe among domestic pigs is significantly higher than in 2022, with 4,500 cases compared to 515 cases.
The number of ASF cases in wild boars in Germany is decreasing, and as a result, restriction zones could be partially reduced or dissolved in the affected federal states. The Friedrich Loeffler Institute has detected 880 ASF cases in wild boars and one case in a domestic pig population. The occurrences in Germany were limited to the districts of Görlitz and Bautzen in Saxony, as well as Spree-Neiße, Uckermark, and Oberspreewald-Lausitz in Brandenburg, near the Polish border.
In Italy, there were 1,009 cases, while Germany reported 880 and Latvia declared 718 positive cases. The biggest outbreaks occurred in Poland, with 2,624 ASF cases reported by the end of the year.
China has approved for the sale and use of genetically modified corn and soybeans.
China has recently approved the licensing of a group of seed companies that can now breed and sell genetically modified corn and soybean seeds. This marks China’s first batch of companies licensed to produce and sell GMO seeds and is a significant move towards commercial planting of GMO grains. The licensing will enable China to reduce its reliance on imports from the US and Brazil, and companies operating in the major grain-producing provinces of Hebei, Liaoning, Jilin, and Inner Mongolia have been named among the 26 approved companies.
Although Beijing has been wary of GMO technology, it has been gradually opening up the market, having approved over a dozen genetic changes since 2019. China is the largest buyer of soybeans and corn and aims to cut down its annual import of over 100 million metric tons of these products to feed its livestock. Commercial planting of GMO varieties will increase yields and reduce future purchases from the US and Brazil. The Chinese corn breeders are preparing to plant about 670,000 hectares of GMO corn in eight provinces next year, more than double the amount planted in 2023.
While the authorities are expected to control the rollout of GMOs, large-scale trials of GMO soy and corn were carried out this year, which the agriculture ministry confirmed to be safe and essential, showing “outstanding” results.
In 2023, the pig production in the UK will decrease below the levels of 2022
According to a recent market report from the UK’s Agriculture and Horticulture Development Board (AHDB), pig meat production is still below last year’s levels. In November, the production amounted to 85,200 tonnes, which is 3.6% lower than in November 2022. However, there was a slight increase of 2,500 tonnes (3%) from the previous month due to increased slaughter. The rise in production may be due to more people preferring to eat gammon during Christmas.
Clean pig slaughter numbers have grown to 910,500 head in November, an increase of 2.6% from October. Reports suggest that pigs were brought forward ahead of Christmas. Nevertheless, the numbers are down 4.8% (45,900 head) from the same time last year and 3.8% (36,100 head) behind the five-year average. This is because the population of fattening pigs continues to decline. Clean pig slaughter year-to-date (January to November) amounts to 9.28 million head, which is a 9% drop (930,000 head) from the same period in 2022.
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