Market Commentary: Monday, January 17/22

Transcript

Hog futures markets are closed today due to the US Martin Luther King Jr holiday. 

Cash hog bids are unreported on the National morning report and the cutout value is higher at midday.

The Canadian Dollar is trading higher against the US dollar this morning, but trading is light due to the US holiday.

For the week ending Jan 21, the Western Hog Exchange OlyWest 20 weekly price is $1.70/kg dressed, the OlyWest 21 weekly price is $1.86/kg dressed, and the BP4 price is $1.72/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

Things to Consider….

The latest US Cold Storage numbers reported pork stocks at 406.7 million pounds for November, a decline of 35.1 million pounds or -7.9% from October.  November’s volume of 406.7 million is the lowest reported monthly volume since the summer of 2010, when volume in August was reported at 388.2 million. It has been over 11 years since US pork stocks have been this low.

 The monthly decline can be primarily attributed to a seasonal decline in hams which were offset by rises in other cuts. For reference, total pork in cold storage for October was revised higher from 439.6 to 441.8 million pounds. The latest tally of pork in cold storage is -3.1% or 13.1 million pounds under year ago levels.

     Total hams in cold storage dropped 74.0 million pounds or -49.3% from last reported, with the bone-in variety down considerably more than boneless hams. Hams in cold storage typically decline from the seasonal peak reached in September through to the end of the year. The latest tally of hams in cold storage are up 1.1 million pounds or +1.5% over year ago levels, however are still well below levels recorded in other more recent years for this time. Bone-in picnics declined 280 thousand pounds or -4.4% from October, which are 2.8 million pounds or -31.4% under last year, while the category for Other pork declined 3.0 million pounds or -5.6% from October and are 8.4 million pounds or -14.2% under year ago levels.

     Cold stored bellies recorded a significant jump from the levels recorded for October, up 13.6 million or +117.1% for November, though it's worth noting that October recorded the lowest belly stocks since September 2015. Compared to last year, bellies in cold storage are up 1.9 million or +8.2%. Spare-ribs were up 15.1 million pounds or +22.6% from a month earlier but was more modestly over last year, up +2.4% or 2.0 million pounds higher. Total loins were up 6.4 million pounds or +20.1% from October with the boneless variety up more than bone-in loins, bringing the category 1.3 million pounds or +3.4% over year ago levels. Trimmings rose 5.1 million pounds or +11.6% from October, bringing them 6.6 million pounds or +15.6% over last year, while butts climbed 1.9 million pounds or +12.4% in November which is 592 thousand or -3.4% compared to a year earlier.

  December 28, 2021


 



Weekly Hog Price Recap

Cash hogs started lower, however national cash recorded improvements mid-week where regional cash went unreported. CME cash improved early on however declined the back-half of the week, with daily moves more moderate than those recorded in cash hogs. Wholesale pork values improved overall however week-over-week declines in hams and bellies weighed US pork cutout $0.64/cwt under the previous week's average.



Canadian market hog values generally improved, supported by the currency rate of exchange and near stable CME cash. Markets derived from lagged base pricing were up the most, with the OlyW 20 up nearly $5.75/hog and the OlyW 21 rose more than $5.25/hog, followed by the BP/TC which improved nearly $4.75/hog. Hog values out of Quebec were up more than $4/hog, while the ML Sig 4 was up more than $2/hog. Ontario hog values were near stable, while Hylife fell more than $3.50/hog. In the US, hog values out of Tyson declined shy of $0.75/hog while JM fell $3.50/hog from week ago levels. 

Weekly Hog Margins

Canadian hog margins were mixed on the week while those in the US weakened further, with rising feed costs weighing on margins. Canadian farrow-to-finish feed costs rose near $3.75/hog, while those in the monitored US region were up more than $2.25/hog from a week earlier. 

Hog margins out of Ontario weakened nearly $3.75 to $19.50/hog losses, while the Sig 4 fell $1.50 to more than $13.25/hog losses and Hylife weakened $7.25 to $11/hog losses. The OlyW 21 strengthened more than $1.50 to shy of $9.25/hog losses and the OlyW 20 margins improved $2 to $8/hog losses, while hog margins out of Quebec improved $0.50 to more than $3/hog losses. In the US, Tyson margins declined $3 to nearly $14.75/hog losses while JM weakened more than $5.75 to $24.75/hog losses from the previous week.
 

US Regional Margins

  • Tyson: $ (14.69) USD X 1.2873 = $ (18.91) in Canadian Dollars
  • Morrell: $ (24.79) USD X 1.2873 = $ (31.91) 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.





Weekly Regional HOG PRICE Report

 

Things to Consider….

The Quarterly Hogs & Pigs report was released Thursday, December 23rd. The latest NASS/USDA report indicated a -4% decrease or 3.1 million head reduction in All Hogs & Pigs compared to last year, with the category for market hogs down

-4.4% and the breeding herd up +0.1% for the December quarter. Pre-report estimates by market analysts expected both market hogs and the breeding herd to be higher than the actuals released on the latest report.

     All Hogs & Pigs declined 416 thousand head or -0.6% from the previous quarter, where market hog inventories were down 406 thousand head or -0.6% while the breeding herd slipped 10 thousand head or -0.2% from the September report.

     Pigs per litter reported a +1.3% climb from last December where the market anticipated no change, while the pig crop declined -3.6% from last year which was lower than expected by pre-report estimates.

Revisions, as stated on the report: 

All inventory and pig crop estimates for December 2019 through September 2021 were reviewed using final pig crop, official slaughter, death loss, and updated import and export data. The revision made to the September 2021 all hogs and pigs inventory was 1.0 percent. The net revision made to the June 2021 all hogs and pigs inventory was 3.3 percent. A net revision of 1.0 percent was made to the March-May 2021 pig crop. The net revision made to the March 2021 all hogs and pigs inventory was 1.1 percent. A net revision of 3.6 percent was made to the December 2020-February 2021 pig crop. The net revision made to the December 2020 all hogs and pigs inventory was 0.2 percent. A net revision slightly upward was made to the September-November 2020 pig crop. The net revision made to the September 2020 all hogs and pigs inventory was 1.3 percent. The net revision made to the June 2020 all hogs and pigs inventory was 2.5 percent. A net revision of 0.9 percent was made to the March-May 2020 pig crop. The net revision made to the March 2020 all hogs and pigs inventory was 3.2 percent. A net revision of 0.8 percent was made to the December 2019-February 2020 pig crop. The net revision made to the December 2019 all hogs and pigs inventory was 0.7 percent. A net revision of 4.3 percent was made to the September-November 2019 pig crop.

 Lean hog futures and Canadian forward contracting prices have moved to new highs because of the latest USDA Hogs and Pigs report.  Producers are encouraged to be patient as markets continue to react positively to the reduced supply expectations for 2022.

  December 21, 2021





Weekly Hog Price Recap

Cash hogs varied however recorded significant late-week declines, with national cash up for the better part of the week while regional cash started the week lower after going unreported the Friday previous. CME cash recorded more modest moves and managed to finish the week higher. Wholesale pork values improved overall with good gains recorded mid-week, however bellies finished the week lower. US pork cutout was $1.85/cwt over the previous week's average.



Hog values out of Hylife were up the most on the week, rising $5.25/hog, followed by those out of Ontario, the ML Sig 4 and Quebec which were up $4.75-$4.25/hog. Markets derived from lagged base pricing were generally lower, with BP/TC down $0.75/hog while the OlyW 21 edged $0.25/hog lower and the OlyW 20 was stable. In the US, hog values out of Tyson improved $2.50/hog while JM fell $4.25/hog from week ago levels. 

Weekly Hog Margins

Canadian hog margins generally strengthened on the week, however support from improved cash hog values were tempered by a rise in feed costs. Canadian farrow-to-finish feed costs rose more than $1.75/hog, while those in the monitored US region were up $0.75/hog from a week earlier.

Hog margins out of Ontario strengthened $3 to $15.75/hog losses, while the Sig 4 improved $2.75 to $11.75/hog losses. The OlyW 21 weakened $2 to $10.75/hog losses while the OlyW 20 declined more than $1.75 to shy of $10.25/hog losses. Hylife fell strengthened $3.25 to $3.75/hog losses while margins out of Quebec improved $2.50 to $3.50/hog losses. In the US, Tyson margins strengthened more than $1.75 to $11.75/hog losses while JM weakened $5 to $19/hog losses from the previous week.
 

US Regional Margins

  • Tyson: $ (11.71) USD X 1.2831 = $ (15.03) in Canadian Dollars
  • Morrell: $ (18.93) USD X 1.2831 = $ (24.29) 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.