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Market Commentary: Wednesday, November 20/19

Transcript

Hog futures have extended their decline to a third session in a row, and the ninth of the last eleven. Since the slide began early this month, hogs have plummeted 10%. A buildup in hog supplies while Chinese export purchases of US pork have been limited at best looks to be the primary driver for the market's movement. Hog supply is expected to reach its peak soon, which would slow heavy hog slaughter and relieve some of the pressure in the market. The market is entering the time of year when domestic demand for pork improves.

Cash hog trade is called steady to lower. Prices are higher on the National and on the Iowa Minnesota morning reports. The morning cutout value is also higher. 

The Canadian Dollar is trading lower against the US dollar at midday. 

For Wednesday, November 20 the Western Hog Exchange OlyWest 19 base price is $1.445/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

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Weekly Regional HOG PRICE Report

 


Things to Consider….


US livestock and meat trade data reported September pork exports at 465,034 thousand pounds, a decline of 43.6 million pounds or 8.6% under the previous report. This brings total US pork exports 32.7 million pounds over year ago levels or 7.6% over last year. It's worth noting that as reported in the weekly export sales report, a significant volume for 2019 was added into early October as a result of previously unreported sources.


        US pork export volume to China decreased the most on the report for September, with the mainland falling 25.8 million pounds from levels for August and represents the lowest monthly volume for the quarter. While significantly lower than previously reported, US pork exports to China are well over year ago levels - an impressive 186% over this time last year. Pork exports to both Mexico and South Korea also reported notable reductions on the report, down 11.3 and 8.6 million pounds respectively. 


        US pork to Canada improved 7 million pounds for September and accounted for approximately 11% over the overall pork volume exported for the month. For comparison, Canada account for 8.5% of overall US pork exports in August.


Pork exports and demand abroad are going to be a major influence to pricing in the year ahead.  As has been confirmed with recent trade activity, improvements to the current US-China trade relations are going to necessary to re-test the previous highs set back in mid-October.


Hog producers will need to show patience with forward contracting in this ever changing volatile hog market. 

November 12, 2019


Weekly Hog Price Recap

Regional and national cash hog values declined daily on generally moderate packer cash bid volume. CME cash by comparison declined the fronthalf of the week while making modest daily gains late week.  Wholesale pork values improved much of the week, with higher primals helping drive pork cutout $4.52/cwt over last week. 



Monitored Canadian hog markets were generally $3-$8 per hog lower, excluding values out of Quebec which improved $6.50/hog. The Sig 5 fell the most, followed by values out of Ontario which fell $6/hog and the OlyW 19 which declined $5/hog. Both the ML Sig 4 and Hylife each fell near $3/hog. In the US, Tyson and JM fell around $10/hog from a week earlier.


Weekly Hog Margins

Hog margins generally weakened on continued cash hog value declines and moderately increased feed costs. Canadian farrow-to-finish feed costs climbed $0.20/hog  while those out of the monitored US region were shy of $0.50/hog higher from week ago levels. 


Hog margins calculated out of the Sig 5 weakened the most on the Canadian side, down $8.50/hog, while those out of Ontario were down $6.25/hog. Margins out of the OlyW 19 weakened more than $5/hog while the Sig 4 fell near $4 and Hylife margins weakened $3/hog. Quebec was the only market to report improved hog margins, strengthening more than $6/hog. In the US, Tyson margins weakened $9.50/hog while those calculated out of JM weakened closer to $11/hog.

US Regional Margins

  • Tyson: $ -17.20 USD X 1.3176 = $ -22.66 in Canadian Dollars
  • Morrell: $ -33.09 USD X 1.3176 = $ -43.60 in Canadian Dollars



Disclaimer: Commodity Professionals Inc. presents this report as a snapshot of the market using current information available at the time of the report. These findings are for informational purposes only and should not be reproduced or transmitted by any means without permission.     Commodity Professionals Inc. does not guarantee, and accepts no legal liability arising from or connected to, the accuracy, reliability, or completeness of any material contained in the publication.