The market drove sharply higher as news of increased demand from South Korea plus continued strong gains in pork cut-out values were widely seen as providing strong support. Another jump in pork cut-out values plus continued ideas of a large increase in pork exports for the next few months were also thought to have driven futures to new contract highs yesterday and provided further support for the market again overnight.
Many traders believe South Korea pork imports could jump as much as 30% this year, after producers in that country had already culled 24% of their herd due to foot-and-mouth disease.
The drop in production from the 4th quarter to the first quarter is expected to be 465 million pounds by the USDA. If so, this would be the largest drop on record as the market moves from a large supply base to a lower production base. The CME Lean Hog Index as of January 24th came in at 76.72, up 26 cents from the previous session and up from 74.75 the week before. The estimated hog slaughter came in at 423,000 head yesterday. This brings the total for the week so far to 1.268 million head, up from 1.202 million head last week at this time and up from 1.192 million head a year ago. Pork cutout values released after the close yesterday came in at $87.48, up 89 cents from Tuesday and up from $86.01 the previous week. This is the highest pork value since September 30th. Weekly average weights for Iowa-Southern Minnesota as of January 22nd came in at 274.3 pounds, down from 274.8 the previous week and up from 269.9 pounds last year.