The ASF event in China continues to unfold. This week’s surprise pork purchase tends to confirm what we’ve been thinking, the situation is much worse that what we’ve been told. Recently China has forged an agreement with Brazil for pork and just this week penning an agreement with Spain for fresh pork. Now they’re buying from the U.S., and paying the tariff. They’re also booking pork for delivery next year. Perhaps they expect the tariffs to be eliminated by the time this pork is shipped.
With disease decimating over half of the hog population in the entire world, how could anyone believe this is not bullish? In addition, low prices cure low prices. U.S. pork is being offered at a huge discount. Buyers appear to be surfacing from everywhere. Finally, there’s a real possibility that hog numbers have peaked. This week’s kill should have been a monster and it was not. In fact, it fell short of projections and lies substantially below the peak kill from a few weeks ago.
The above was part of an e-mail I received after the close. The writer is in Chicago and keeps close tabs on market.