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U.S. hog market monitors African Swine Fever outbreak

Photo Courtesy of Stewart-Peterson

United States pork producers have had their fair share of struggles this year. A market adviser discusses opportunities for U.S. pork on the near horizon.

AUDIO: John Heinberg, Stewart-Peterson

The African Swine Fever virus was confirmed in China, back in early August. The disease has since spread, entering western Europe. John Heinberg, market adviser for Stewart-Peterson, says the U.S. hog market is watching this event closely.

“In the last few weeks or so, we’ve seen some growth of African Swine Fever. Think about pork demand in China. They eat approximately twice as much pork as we do, about 70-pounds per person, on a capita basis. It’s a major driver of food inflation. We’re going to watch (and) see how that comes together because if African Swine Fever becomes an issue, it could be a major mover in the markets, in terms of pork demand for U.S. products going overseas,” Heinberg said.

The U.S. Meat Export Federation recently released a report on meat exports. U.S. pork exports fared well, despite challenges in China and Mexico. Heinberg says a disease outbreak could help the U.S. with its increasing supply of animal protein.

“Now, the current structure of the market is fairly interesting. We have a lot of supply. We have near record slaughter numbers over the last handful of weeks, (which) puts a lot of pork in the cooler. We have a lot of beef and poultry in the cooler, so there’s a lot of protein competition. Producers need to stay active on the marketing side. The Swine Fever issue is giving some strength to those deferred contracts.”

Heinberg says, “There’s some good value out there.” He shares the best way to act on  profit-taking opportunities.

“Producers need to be smart about things and say, ‘Hey, profitability is here. Let’s make sure we protect that.’ Make sure you keep some form of protection that’s going to allow your top side to be open. If the (African) Swine Fever does kick in and we see a shift in demand, what’s an $80 price now could quickly turn into $110 down the road,” Heinberg said.