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Market Commentary: Tuesday, December 1/20


Hog futures are trading mixed at midday after a higher open as traders try to balance recent market moves given the lack of active trade volume during Thanksgiving week. Traders are looking for additional confirmation from cash and pork cutout market support, but the underlying moves higher in most commodity and stock markets this morning is likely to limit downside market moves. 

Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to higher. Prices are lower on the National and on the Iowa Minnesota morning reports.  The morning cutout value is lower. 

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

For the week ending Dec 4, the Western Hog Exchange OlyWest 20 weekly price is $1.564/kg dressed, the OlyWest 21 weekly price is $1.719/kg dressed, and the BP4 price is $1.5935/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report


Things to Consider….

As the market closes in on the final month of 2020 it only seems fitting to look back at what happened in what may be considered one of the most disrupted years in US pig production (or a least we can hope).

The weekly percent change in US Federally Inspected slaughter (top graph) paints a horrific story from earlier this year with numbers 10-30% below 2019 for 7 consecutive weeks due to major US processing plant closures associated with Covid-19 outbeaks.  After around mid-June the 2020 % of 2019 slaughter graph  goes on to show the return to positive percent changes as the industy played catch up, slaughtering more animals than had ever been seen before during the summer months.  Only to then settle in at 0% starting mid-September as the backlog of market ready hogs had finally worked their way through the system.  The good news here, is that slaughter capacity in the US has returned to its pre-covid volumes.   

The question everyone is asking now is, where are slaughter numbers going to be in the weeks and months ahead?     It should not come as a surprise that many production forecasts have pig numbers dropping in 2021 as sow liquidation was recorded for most of the last year and is continuing although at a slower rate, even as market hog slaughter numbers have leveled off compared to 2019.

Sow slaughter, if large enough, can be used as a leading indicator to supply, and suggests that not only will market ready hog numbers begin to decline slightly in 2021, they will continue to decline for approximately 12-18 months as a result of the net production removed from the system.  Productivity gains will be expected to dampen some of the impact of lost sows but pigs/litter at 1% higher will not make up the ground lost from an average of 10% fewer sows’ year to date in 2020.

Producers who currently have some protection on the books for 2021 can likely afford to monitor the situation in the short-term.  Producers who are fully exposed to the market may choose to use the near contract highs in the summer months to lock in profitable prices for what still could prove to be an uncertain production year in 2021.

November 24, 2020

Weekly Hog Price Recap

Cash hogs were mixed to generally lower throughout most of the week, with regional cash reporting some mid-week gains while national cash improved only Friday. By comparison, CME cash declined daily. Wholesale pork values also varied during the week however most primals finished lower, pushing pork cutout $4.04/cwt under the previous week.  

Canadian hog markets continue to slide, generally $2 to $9 per hog under week ago levels. Values out of Quebec and Hylife were each down more than $9/hog. Ontario declined $5.50/hog, followed by BP/TC values which fell $4.50/hog and remaining Canadian markets were $2-$2.75/hog lower.  US hog values also fell, with Tyson down more than $4.25/hog while JM fell closer to $3/hog from week ago levels.

Weekly Hog Margins

Monitored hog margins continue to weaken on lower hog and pork values and were further pressured by rising feed costs. Canadian farrow-to-finish feed costs rose shy of $1/hog while those in the monitored US region were up closer to $0.75/hog.

Margins out of Hylife weakened $10 to $6/hog profits, while the OlyW 20 fell $3 to $6/hog profits and the OlyW 21 declined nearly $3.50 to $0.75/hog profits. Remaining monitored hog margins calculated overall losses. Margins out of Quebec weakened $10 to $0.50/hog losses, while the Sig 4 fell $3.50 to $5.75/hog losses and margins out of Ontario dropped nearly $6.50 to $8.50/hog losses. In the US, Tyson margins weakened $4.75 to nearly $4/hog losses while JM margins fell $4 to $11.50/hog losses.

 US Regional Margins

  • Tyson: $ (3.90) USD X 1.3079 = $ (5.10) in Canadian Dollars
  • Morrell $ (11.62) USD X 1.3079 = $ (15.20) 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.