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Market Commentary: Monday, October 15/18


Hog futures are trading higher in all months. Sharp gains continue to hold across all hog futures with triple-digit gains seen in all contracts. The sharp losses seen last week have left the entire complex oversold, with the focus on increased buyer support moving back into the complex through the entire session. Hog slaughter fell short of expectations once again last week, well under USDA estimates. If this is a supply issue and hog numbers are short, then this should be supportive to December futures.

Cash hog trade today is expected to be steady to $2 lower; most bids are $1 lower. Prices are lower on the National and on the Iowa Minnesota morning reports. The cutout value is higher.  

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

For Monday, Oct 15, the Western Hog Exchange OlyWest price is $1.533/kg dressed and the OlyWest plus price is $1.543/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Forward Contracting at Christmas/New Years

Re: Forward  Contracting for the holiday shortened weeks of December 23, 2017 to January 5, 2018

Dear Western Hog Exchange Producers,

Please be advised that due to the 3 day week during the Christmas break and 4 day week of New Years, Forward Contracting limits have been reached.
No further Forward Contracts will be taken for those weeks.

We recommend talking to Olymel Hog Bookings, early to schedule your loads. It may be advisable to ship early if that is possible for your operation.
They can be reached at: at (403) 343-8700 or 1 (877) 488-8700 ext 5281 or ext 5287.

Weekly Regional HOG PRICE Report


Things to Consider….

Since the last time lean hog futures were reviewed in this report (about a month ago), most 2019 contracts have reached new highs while the remaining 2018 months remain below top levels registered earlier in the year.  Although the remaining October and December contracts have not reached top values from earlier in 2018, they have performed well given the circumstances of the last few months.

December futures topped at $60 US per cwt in the last couple of weeks following a massive 6-week recovery which saw the contract come back from a low of $44 in mid August.  The recovery was spurred by several pieces of news that turned the once ALL negative industry into a more positive market.  Trade deals between the US, Mexico and Canada were positive while news of ASF spreading in China and Europe bolstered prices.  

However, as of late the positive news appears to be waning, which historically can prove to be a turning point in the market, at least in the short-term.  With most 2019 contracts near the top end of trade, producer selling, and long liquidation are being noticed providing a cap to the market.  Seasonally, prices trend lower into the 4th quarter pressured by meat values that traditionally weaken heading into US Thanksgiving.  Producers should not be surprised to see hog futures and cash prices begin to decline in the weeks ahead.

As for hog production margins as illustrated at the end of the report, a return to slightly positive numbers in the cash market means there are some considerable positive numbers for the early and mid parts of 2019.  The opportunity to secure some positive returns for 2019 should not be passed up as plenty of negative news can easily surface once into the large slaughter weeks expected later this year. 

October 9, 2018

Weekly Hog Price Recap

Regional and national cash hogs were reported moderately mixed during the week.  Daily bids were considered moderate peaking Tuesday and Wednesday with both those days reporting higher values. CME cash reported moderate daily gains in each of the last 5 business days. Wholesale pork values were mixed, with weakening loins, ribs and butts dragging cutout $0.11/cwt lower.

Monitored Canadian hog markets were generally $5-$16/hog stronger on the week with markets based off CME cash up the most. Pricing out of the east was again up the most, with Quebec up shy of $16/hog and Ontario rising near $11/hog. The Sig 4 was up $9/hog and Hylife improved $7/hog. The WHE rose $6/hog while the Sig 5 was up closer to $5/hog, weighed on in part by it's average with the Sig 3 which only edged $1/hog higher. In the US, VMR-based Tyson jumped $9/hog benefitting from higher cash bids overall while JM improved more than $1/hog on the week.

Weekly Hog Margins

Hog margins reported another solid week on rising cash hog values.  Canadian hog margins were changed very little overall on feed costs with Canadian farrow-to-finish feed down $0.15/hog, while US hog margins were weakened $0.50/hog due to the estimated farrow-to-finish feed cost increase. 

Monitored Canadian hog margins were generally $5.50-$16/hog stronger, with Ontario and Quebec calculating margins up at the top end of that range. Quebec margins improved $16/hog while Ontario's calculated margins were $11/hog stronger.     The Sig 4 hog margins were $9/hog stronger, followed by those calculated out of Hylife which rose $7/hog. Hog margins based off the WHE were $6/hog stronger, followed closely by those based off the Sig 5. In the US, Tyson margins improved $9/hog while JM margins improved shy of $1/hog.

US Regional Margins

- Tyson $15.43 USD X 1.2858 = 19.84 in Canadian Dollars 

- Morrell  $10.51 USD X 1.2858 = 13.51 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.