Russia confirms U.S. pork purchases, and beef rebounds

Livestock Report

Hogs: Russia has formally announced it will restart purchases of U.S. pork. In the grand scheme of things, this is not the major foundation of this year’s bullish story. It certainly adds a little something extra though. In 2012 they purchased 5% of our exports. As exports are around 22% of our total demand, this adds 1.1% to our demand base.

That does not sound like a lot, but consider this year’s current production stats (slaughter -0.5% yr/yr X weights +2.9% yr/yr = pork production +2.4%). This 1% increase in demand could take care of 1/3 of this year’s weight increase.

For the short term, no this will not make a bull or bear market. For the big picture, months from now, this could affect pricing. It also comes at a time when the U.S. pork industry is concerned about exports to its number three export buyer, China.

Cattle: For the short term, this market has seen wholesale beef rebound due to last week’s low slaughter. That low slaughter came partly from low cattle numbers but also partly from packer cutbacks. This leaves the trade wondering how much of the higher beef prices will be passed onto the cattle feeder. There are two weeks left of these tight numbers before last year’s placement pattern allows for more cattle to show up.

About the Author
Rich Nelson

Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.

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