37 The Trusted Source for Canada’s Pork Producers Better Pork | August 2024 Moe’s Market Minute After a forgettable year in 2023, the outlook was improving for the hog/ pork industry in the first few months of 2024. The missing link in 2023 was U.S. domestic demand, which strengthened during the early part of the year. Resurgent cash hog and cutout values reflected the improvement in demand. But then both of those indicators of demand stalled during late spring and has since haunted the industry, at a time when seasonal U.S. cutouts, cash and futures rise. Strong U.S. pork exports continued to be the “undying engine,” offsetting weak U.S. demand. U.S. pork exports during the first four months of this year were higher by eight per cent year-on-year (Y/Y) to 1.04 million metric tons (MMT), with their value being up 10 per cent versus last year’s record pace to $2.89 billion. There’s no stopping the U.S. pork export train, even when domestic demand is lagging. A strong U.S. dollar, though, adds concerns to the export market for U.S. pork. Exports represent 25 to 30 per cent of the pork demand pie, whereas U.S. domestic demand represents 70 to 75 per cent and thus it matters more at the end of the day. During late-spring/early-summer, weak U.S. domestic pork demand, especially at the consumer level, was weighing on hog futures. U.S. real per capita consumption of pork was down by about five per cent Y/Y at that time. Cash hogs and pork cutouts traded sideways due to a lack of U.S. domestic demand and higher hog weights. Prior to spring of 2024, U.S. producers had their worst-ever year-anda-half performance hog/pork margin-wise. Lean hog futures, though, put together an impressive rally since the start of the year and the July contract peaked at $111.25 per hundredweight (cwt) since April 10. But hopes of a strong performance in 2024 faded as futures fell sharply, creating a double top, and once the support broke at $103/cwt, futures fell hard as investors took profits and removed the premium versus cash. Hog margins were positive during the early part of 2024, but the drop off in futures from the highs since the second week of April took the wind out of the sails. July futures fell by about $21 to its low in mid-June. Iowa University data indicated that PERFECT STORM AT THE WRONG TIME The U.S. beef cash market remains red-hot compared to U.S. pork. By Moe Agostino & Abhinesh Gopal Weak U.S. domestic pork demand at the consumer level was weighing on hog futures during the late-spring/early-summer. shaiith - stock.adobe.com photo
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