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Market Commentary: Thursday, December 13/18

Transcript

Hog futures are trading lower in all months but December which expires tomorrow. Strong underlying pressure has redeveloped across hog futures with February futures holding pressure at 90 cents per cwt through late morning. The overall pressure in the complex has been sparked by aggressive softness in soybean markets as traders seem to be disappointed by the latest rounds of sales to China following all of the anticipation over the last couple of weeks. This is creating concerns about how much support the pork industry will see from any China buying activity. Pressure is also coming from plentiful market hog supplies and wholesale pork demand fighting to stay abreast of record tonnage.

Cash hog bids in early trade are steady to $1 lower; most bids are steady. Prices are higher on the National and unreported on the Iowa Minnesota morning reports. The morning cutout value is also lower.  

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

For Thursday, Dec 13, the Western Hog Exchange Olymel 17 base price is $1.243/kg dressed and the Olymel 19 base price is $1.311/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

WHE Christmas and New Year's Hours


This is a notice of holiday hours to all of our valued shareholders and producers, to note that WHE will be closed from Monday, December 24th to Wednesday, December 26th and the office will be open again on Thursday, December 27th.

We will also be closed on Tuesday, January 1 for New Year’s Day.

We sincerely wish all of you the safest and most wonderful holiday season this year and are looking forward to a very strong and exciting 2019 here at the Western Hog Exchange.


Merry Christmas and a Happy New Year!

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….


Late last week the USDA released Monthly US Pork export numbers and as expected volumes increased seasonally over the previous month (Sep) and once again came in higher than year ago levels for the 15th consecutive month.


Total US pork exports reached 501.944 Million pounds, one of only 8 months in the last 7 years to top the 500 Million pound mark.     Notable export gains in countries like the Philippines, South Korea and renewed interest from Japan were more than enough to overcome minor loses in Canada, Mexico and China.


Expectations are for exports to continue at a robust pace, based on weekly data, offering underlying support to the lean hog futures market into 2019.  However, for the remainder of 2018 high slaughter numbers and abundent pork supplies are going to continue to keep cash markets under wraps.  Producers should expect to see a bottom in the cash hog market in the next week or so as seaonality is soon to kick in.


Lean hog futures peaked on Nov 23rd and have since traded mostly sideways with little change from the high registered a couple weeks ago.  Most contracts are only $1 from their top which still provides excellent hedging opportunities for producers.  Producers must remember that although most of the news being published recently can be considered positive long-term, the market will eventually run out of positive things to say, likely resulting in a correction to today’s strong prices.


December 11, 2018







Weekly Hog Price Recap

Cash hogs fell on continued ample supplies and were pressured by lower packer bids reportedly due to lessened retail demand ahead of the Christmas holidays. Regional and national cash hogs finished the week lower with weaker values reported the front half of the week, primarily Wednesday. CME cash was also reported lower, however lessened values were reported the latter half of the week. Cash hog bids were generally moderate, ending the week on the lighter side. Wholesale pork values reported stronger primals, pulling cutout $3.44/cwt over a week earlier.




Canadian hog markets were generally $1-$3/hog lower. Markets based off regional pricing, such as the WHE and ML Sig 5, as well as pricing out of Quebec were each down near $2/hog. In the prairies, 201-derived pricing pushed markets $1/hog lower. Further east, Ontario saw values decline $1.50/hog. In the US, Tyson values declined more than $1/hog while those out of JM fell more than $3/hog.


Weekly Hog Margins

Rising feed costs coupled with falling hog values pressured hog margins again this week, dragging hog margins to a 12-week low. Farrow to finish feed costs jumped more than $3/hog north of the border, while those in monitored US regions climbed shy of $2/hog.  Monitored Canadian hog margins weakened $4-$5.50/hog with the WHE, Sig 5 and margins calculated out of Quebec down the most. Other Canadian hog margins based off 201-based pricing were $4-$4.50/hog lower. In the US, Tyson margins fell $3/hog while JM hog margins were calculated $5/hog lower.

US Regional Margins

- Tyson $(14.43) USD X 1.3293 = $(19.18) in Canadian Dollars

- Morrell $(24.51) USD X 1.3293 = $(32.58) 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.