Things to Consider…. As lean hog futures continue to rally to multi-year highs a quick look at current pork stocks and supply is timely to determine the validity behind such positive pricing levels. US Cold Storage reported pork stocks at 451.8 million pounds for March, down -6.5% or 31.6 million pounds under the previous report with current levels 165.2 million pounds or -26.8% under last year. For reference, total pork in cold storage for February was revised from 491.5 to 483.4 million pounds. Most pork categories reported decreased volume in cold storage for March. Total hams declined the most on the month, dropping 31.5 million pounds or -34.2% from February in a seasonal move however current stocks are 27.6 million pounds or -31.3% under year ago levels. Typically, hams in cold storage start to increase seasonally in April and continue trending higher to peak in September. Picnics in cold storage were 218 thousand pounds lower for March, with current stocks -2.8% under February levels and -30.2% or 3.3 million pounds under last year. Bellies were down 2.3 million pounds or -6.1% for March, bringing current stocks -54.9% or 42.9 million pounds lower than last year. Spare ribs increased the most compared to other pork categories, up 8.1 million pounds or +8.6% from previously reported and -23.5% or 31.2 million pounds under last year. Loins in cold storage were up 3% or 1.4 million pounds from February, as bone-in loins climbed 5.6 million pounds while the boneless variety declined 4.3 million pounds for March. Based on current US Federally inspected slaughter which is trending just above the 2018 and 2019 levels, supplies are being more then offset with elevated export volumes and domestic consumption. The graph above illustrates that in 2018 and 2019 cold storage was around 600M pounds with less slaughter and now today in 2021, there is roughly 450M pounds in cold storage with higher slaughter. Exports are the main reason for the decline in supplies which based on recent news from China this week on more ASF, is not likely to soften any time soon. Lean hog futures are expected to continue firm for the summer months and early fall. Major price adjustments would only be expected in a major shift in demand occurs. Supply numbers are not expected to change for at least 1 full hog cycle which would mean at the earliest more hogs could be expected in the summer of 2022. |