Market Commentary: Wednesday, July 28/21

Transcript

Hog futures - Lean hog futures may have petered out but there's still traction being made in the market fundamentals. It's impressive to see packers have already bought upward of 6,000 hogs; with supplies being short they wouldn't be aggressively chasing the cash hog market if they didn't think the pork cutout value was going to wane lower.

Cash hog prices are higher on the National morning report and the morning cutout value is higher.  

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

For the week ending July 30, the Western Hog Exchange OlyWest 20 weekly price is $2.54/kg dressed, the OlyWest 21 weekly price is $2.61/kg dressed, and the BP4 price is $2.44/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

Things to Consider….

US FI hog slaughter for the week ending July 17th was reported at 2,280 thousand head: up +18.6% from the previous week, -9.4% under the same week last year and +1.0% year-to-date compared to 2020.

US sow slaughter for the week ending July 3rd was down -5.8% from the previous week to 56,200 head, which is up +11% compared to last year. Year-to-date, sow slaughter is up +5.2% compared to the same weeks in 2020.

Weekly average barrow and gilt weights in the ISM reporting area for the week ending July 10th was reported at 278.2 lbs, up 1.6 pounds or +0.6% from a week earlier but -1.7% compared to year ago levels. Year-to-date, hog weights reported for 2021 are -0.5% under the same weeks in 2020.

US pork production rose 72.4 million pounds or +17.8% from the week previous, bringing overall production -10.2% under last year but +1.3% over last year-to-date. The second half of the year will be a better reflection of production as the impact of reduced slaughter in early 2020 was not repeated in the second half of the year.

Lean hog futures have priced in the current production declines and are anticipating lower supply for the second half of the year. Producers looking to reduce the risk of price fluctuations later this year should consider current forward contracting levels as a reasonable entry point.

July 13, 2021

Weekly Hog Price Recap

Regional and national cash hogs were lower in the first half of the holiday-shortened week, however turned higher the latter part of the week. CME cash declined daily however generally more moderate than recorded in cash hogs. Wholesale pork values varied with bellies notably higher while ribs and butts fell. US pork cutout averaged $0.87/cwt over the previous week.

Market hog values were generally lower again this week, weighed on by the declines in cash hogs. Those derived from lagged base pricing were considerably weaker, such as the BP/TC which dropped $13.75/hog and the OlyW 20 which fell $12/hog. Hog values out of Ontario and Quebec were down $3 and $2.25 respectively, while Hylife was nearly unchanged from a week earlier. The OlyW 21 edged $0.50/hog higher while the ML Sig 4 climbed $1/hog. In the US, Tyson fell $14.50/hog while JM declined near $10/hog from the previous week.

Weekly Hog Margins

Canadian hog margins were stronger overall, thanks largely to a significant reduction in feed costs. Canadian farrow-to-finish feed costs dropped more than $5.25/hog while those in the monitored US region declined closer $5/hog from a week earlier.

Despite weakening more than $6.50/hog on the week, hog margins out of the OlyW 20 continue as the strongest monitored in Canada at $92.50/hog profits. Ontario hog margins improved $2.25 to $84.75/hog profits, while those out of Quebec improved $3 to $83.25/hog profits. ML Sig 4 margins rose more than $6.25 to $73.50/hog profits, while Hylife was up $5.25 to $68.50/hog profits and the OlyW 21 improved more than $5.75 to $65.50/hog profits. In the US hog margins weakened, with Tyson falling near $9 to $100.75/hog profits while JM margins was down $5 to $96.75/hog profits.

US Regional Margins

  • Tyson $ 100.82 USD X 1.2456 = $ 125.58 in Canadian Dollars
  • Morrell $ 96.82 USD X 1.2456 =$ 120.60 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.

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