Going to be seeing abnormally high prices on pork products for longer than expected. There's a link below to a Reuters report about Chinese imports surging and a short essay regarding cold storage stocks. China has been buying more imported pork for a while, since the African Swine Flu outbreak last year. The Pandemic encouraged them to buy even more, because their new national pork supply model kind of got put on hold. They amped up imports big time in August though. A lot of it is coming from South America, China’s preferred trade partner. But WH Group, the owners of Smithfield Foods, are expressing that they have seen 90% increase in sales to China compared to a few years ago. Why is this affecting domestic prices? The sales to China are eating into US cold storage stocks, which typically play a large roll in keeping prices steady in the fall and winter. During the summer we were working off the backlog of hogs left in feed yards due to the shutdown. That’s gone now so replenishment of cold storage is slow. Its kind of like for every 1 hog's worth of meat we put into a freezer, China is taking 2.
Our belly stocks are down 33% from last year and exports are rising which is showing in higher than normal belly and bacon costs. China purchases a large amount of picnic meat too which eats into what we typically use for making a value added items like sausage and hot dogs. This puts pressure on trim prices as well. The trends on trim and picnic won't be as long lasting as other cutouts, they typically ease in November. Hams are steadier because Mexico isn’t buying right now. Retail is also staying quite strong even into the colder months. We're likely to see counter historic prices this year on many products.