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Market Commentary: Monday, February 24/20

Transcript

Hog futures are trading lower in all months. Futures got caught up in the emotional selling pressure through the commodity and financial markets with aggressive selling seen in nearly all commodity markets and stock markets posting strong triple digit losses. The growing concern of coronavirus outbreaks that is spreading from China to other parts of the world is creating additional concerns of the overall economic impact not only on select countries, but the global community.  

Cash hog bids are called 50 cents lower to $1 higher. Most bids are steady to 50 cents higher. Prices are higher on the National and on the Iowa Minnesota morning reports. The morning cutout value is higher.

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

For the week ending February 28, the Western Hog Exchange OlyWest 20 weekly price is $1.307/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

Things to Consider….

     The latest US meat trade data reported pork exports for December at a new historical monthly high at nearly 681 million pounds, surpassing the previous highs recorded in Nov'19 & Apr'18. US pork exports rose 57.7 million pounds from November, or 9% over the previous report. This brought total US pork exports 154.9 million pounds over last December or 29.4% higher, and finished 2019 +7.7% over last year-to-date. 

     US pork exports to China* accounted for the greatest share of the monthly figure, with volume 63 million pounds over November levels. Mainland China has recorded greater monthly volumes of imported US pork compared to Mexico (typically the largest importer of US pork) for the past two consecutive reports, with the mainland accounting for 34% of December's overall pork exports and Mexico sitting around 22%. For comparison, China* for the previous 12-months averaged 14.5% of total US pork exports, while Mexico's 12-month average sits at 25.3%. Exports to China are expected to continue at higher volumes given the domestic shortfall ASF has had on the country's hog herd. 

     Mexico improved 20.8 million pounds over November levels, reaching a 5-month high at 149,550 thousand pounds. US pork to Panama also increased notably for December, with the latest volume up 10.7 million pounds on the latest report and reaching a new historical high at 15.2 million pounds. It's worth noting however that volume to Panama tends to surge for the month of December before falling to generally 2-3 million pounds monthly for the remainder of the year. Exports to remaining major destinations for US pork declined from November levels. 

(China* includes mainland China, Taiwan and Hong Kong as a total)

     As the market struggles to comprehend the eventual impact of ASF in Asia and parts of Europe, producers in North America are faced with non profitable market hog prices and slumping packer demand due to excess hog availability.

     Although world demand for pork is projected to be strong for the foreseeable future, packer capacity re-enters the conversation after being absent for several years.  The adage goes, one hog beyond packer capacity is worth nothing if nobody can kill it.  The industry needs to see pig number decline seasonally before prices are to recover or capacity increase (again).


February 11, 2020


Weekly Hog Price Recap

Cash hog pricing varied throughout the week, with heavier losses reported Wednesday. Packer cash bid volume was considered generally moderate to lighter, peaking midweek. CME cash declined daily, however daily moves were more moderate compared to those reported in regional and national cash. Wholesale pork values fell with all primals averaging lower weekly values, driving pork cutout $6.31/cwt under week ago levels. 



Monitored Canadian hog markets were generally $4-$5/hog lower than week ago levels, excluding the new OlyW 20 and values out of Quebec which were down $9 and more than $16 per hog respectively. Hylife and the ML Sig 5 were each down near $5/hog while remaining markets were generally $4/hog lower than the previous week. In the US, Tyson edged $0.30/hog lower while JM declined near $7/hog from week ago levels.

Weekly Hog Margins

Monitored hog margins weakened on falling hog values, further pressured by an uptick in feed costs. Canadian farrow-to-finish feed costs increased around $0.60/hog while those in the monitored US region were more stable, climbing $0.15/hog from the week previous. 

Hog margins out Quebec weakened the most, down another $16.50/hog, and has slipped to negative levels however remains the least weak compared to other monitored Canadian markets. The OlyW 20 weakened more than $9/hog from the calculated margins for the previous week, similar to margins levels out of Ontario. Margins out of the Sig 5 as well as Hylife each weakened more than $5/hog, with the Sig 5 maintaining the weakest margin north of the border, while remaining Canadian margins weakened near $4/hog. In the US, Tyson margins improved modestly, strengthening $0.10/hog, while JM weakened $7/hog from week ago levels.

US Regional Margins

  • Tyson: $ (8.54) USD X 1.3287 = $ (11.35) in Canadian Dollars
  • Morrell: $ (19.32) USD X 1.3287 = $ (25.67) 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.