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Market Commentary: Tuesday, August 11/20

Transcript

Hog futures are trading lower with traders covering positions following aggressive triple-digit gains over the past two sessions. This pullback in prices is not expected to change the tone of the market, but give traders time and opportunity to square positions given the technical support still holding in the complex. A severe wind storm blew through the US Midwest on Monday. Daily slaughter is being reduced due to the destruction and disruption of infrastructure and power in many areas. This is not expected to have a long-term impact on the market, but it will add short- and long-term challenges to some production facilities, mainly in Iowa and Illinois.

Cash hog bids are expected 50 cents lower to $1 per cwt higher, with most bids steady to firm. Prices are lower on the National and unreported on the Iowa Minnesota morning reports.  The morning cutout value is higher. 

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

For the week ending Aug 14, the Western Hog Exchange OlyWest 20 weekly price is $1.244/kg dressed, the OlyWest 21 weekly price is $1.490/kg dressed, and the BP4 floor price is $1.400/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Weekly Regional HOG PRICE Report

 

Things to Consider….

USDA Weekly Export data confirms that 2020 pork exports are likely to continue ahead of 2019 however the rate appears to be narrowing heading into the back half of the year.  Massive export volumes late in 2019 are not likely to occur again in late 2020 however the pace from the first half of the year will keep year to date volumes ahead in 2020.  Major weekly declines are being recorded in China which have dropped of from a few weeks above 20,000 MT to the last reported week just below 10,000 MT.     Mexico on the other hand has trended higher as of late reaching nearly 12,000 MT up from an average of 7000 MT at this time last year.

With US trade policy still uncertain and a looming Presidential election set for November 3rd, not much is expected from the Phase 1 deal agreed to between China and the US late in 2019 which took effect in Feb of 2020.     Although China has continued to shown signs of ongoing purchases with corn and soybeans, the pork sector appears to be cooling of with weekly numbers dropping to the lowest level in 9 months.

US slaughter numbers over the next 2 months are going to be critical to the direction of the market moving forward.  Weekly kills appear to have leveled off which means the US processing industry has caught up to the backlog which occurred in early spring.  With weights also leveling off the coming 2-3 weeks could be the sign everyone is waiting for to signal a drop in production coming.     Stay tuned….

August 4, 2020



Weekly Hog Price Recap

Regional and national cash hogs averaged well above week ago levels on strong gains reported Monday despite declining modestly the remainder of the week. Alternatively, CME cash primarily improved with the strongest gains reported midweek. Wholesale pork primal values were mixed from the previous week with declines in hams, bellies and loins pushing pork cutout $1.74/cwt under the previous week.

Monitored Canadian hog markets varied with some markets reporting declines while others reported as much as $8/hog improvements on the week. Values out of Ontario strengthened the most, up $8.25/hog, while the OlyW improved shy of $7/hog and the ML Sig 4 rose $4/hog. The BP/TCP was again unchanged this week, while values out of Quebec fell $1.25/hog and Hylife was $2/hog lower. In the US, values out of Tyson were jumped $9/hog while JM surged $14/hog from week ago levels.

Weekly Hog Margins

Most Canadian hog margins strengthened on improved hog values and were further aided by reduced feed costs. Canadian farrow-to-finish feed costs fell $0.70/hog while those in the monitored US region edged $0.25/hog under the previous week. 

Hog margins out of Hylife and Quebec continue as the strongest monitored overall, however each weakened modestly from a week earlier. Hylife margins weakened nearly $1.50/hog to $5.50/profits while those out of Quebec were down $0.55/hog to nearly $1/hog profits. Remaining Canadian margins improved on the week however remain in negative territory. Hog margins out of Ontario strengthened near $9/hog to $26/hog losses, the Oly W strengthened $7.50/hog to $21.50/hog losses and the ML Sig 4 margins improved more than $4.50/hog to $17.50/hog declines. In the US, Tyson margins strengthened near $10/hog to $32/hog losses while JM improved more than $14/hog from a week earlier to $30/hog losses.

US Regional Margins

  • Tyson: $ (31.89) USD X 1.3389 = $ (42.70) in Canadian Dollars
  • Morrell: $ (29.98) USD X 1.3389 = $ (40.14) 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.