wmeubank@ocp.kcmo.com
COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(March 23, 1997)
LIVESTOCK:
The U.S. hog industry was fundamentally and profoundly changed this week when it was announced that Taiwan has withdrawn from the pork exporting business following the discovery of hoof and mouth disease in their herds. With Taiwan out of business for the next 2 to 5 years, American pork producers are in the unique position of capturing a huge amount of new-found demand.
Most analysts are already estimating that over the next 2 years, the U.S.
exports of pork to Japan could triple. This new-found demand will add $6
to $10/cwt on the prices of U.S. hogs for years to come.
The pork complex was fundamentally bullish long before Taiwan was forced
out of the export business. The Taiwan factor was simply the spark needed
to turn the market psychology from bearish to bullish. The week ended with
hogs and bellies limit up two days in a row. I was quite bullish towards
the hog complex long before the Taiwan situation came to be. That's why
I took such an aggressively bullish posture towards the pork complex. Luckily
it paid off. Consider this. Before the Taiwan situation, this newsletter
was long nearby hogs, bull spread hogs, long pork bellies, long hogs and
short cattle and long distant hogs. Can't get more bullish than that. And
as I said, luckily it paid off.
My work continues to suggest that we are entering a period of soaring commodity
prices. A very bullish hog market is just another reason for me to remain
a raving bull.
Jerry F. Welch
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