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Market Commentary: Friday, May 24/19

Transcript

Hog futures are trading lower in all months. Active pressure has quickly moved into lean hog futures trade through the last couple hours of trade Friday. The concern that markets will remain closed over the next three days is sparking increased uncertainty through the entire lean hog complex surrounding the relationship between the U.S. and China. Even though volume in the complex remains extremely light, the focus on market protection is pushing prices $2 to $2.50 per cwt lower at the end of the week.

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

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

For Friday, May 24, the Western Hog Exchange Olymel 17 base price is $1.948/kg dressed and the Olymel 19 base price is $1.993/kg dressed. The Olymel 17 weekly price is $1.991/kg dressed and the Olymel 19 weekly price is $2.010/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

 


Things to Consider….


        US Cold Storage reported total pork stocks at 621.9 million pounds for April, an increase of 2% or 13.5 million pounds over March. This brought pork in cold storage 2% under last year at this time or 27.6 million pounds under April 2018. 


        Ham supplies in cold storage were the greatest contributing factor to the overall rise on the report. Total hams jumped 17.9 million pounds for April, with the boneless variety accounting for the majority of the rise. This type of increase in cold ham supply is considered typical following the Easter holiday as total hams in cold storage find a bottom in March and but recover to peak seasonally in September. Picnics also reported higher levels, up near 2 million pounds from March or 24% higher than last reported. 


        Spare ribs in cold storage rose 6.2 million pounds, up 4.4% from last reported and 4.5% over last year. Supplies for the cut tend to peak in March before falling to a seasonal low in August. Bellies in cold storage were up 2.3 million pounds for April, followed by total loins which were up 1.5 million. Offsetting in part the rises in the categories previously mentioned were declines reported in trimmings, butts, and other pork. Trimmings dropped 7.5 million pounds, a decline of 13.5% from March, while butts fell 19.6% from last reported or 5.1 million pounds lower. 


        Historically speaking, pork in cold storage tends to decline from April into May as supplies of loins, ribs and butts begin to reflect better product movement with the start of the grilling season.


After trading firm for most of the week, futures continued their volatile trade by dropping limit on Friday to the same lows seen 2 weeks ago.  Expectations are for continued two sided trade for the remainder of the summer.     Producers should continue to take protection on the upper end of the range.

May 21, 2019








Weekly Hog Price Recap

Cash hogs reported good strength midweek which helped regional and national cash values improve from a week earlier, despite lessened values reported Monday and Friday. Packer cash bid volume was considered moderate overall excluding with strong levels reported Tuesday. CME cash also improved, however rose daily and day-to-day moves were more moderate. Wholesale pork values were mixed overall with stronger loins, hams and bellies pulling pork cutout $1.72/cwt higher from a week earlier.



Monitored Canadian markets generally rose $1-$4 per hog, with those based off regional and national cash on the higher end of that range. The Sig 5 rose the most rising $4/hog, carried higher by the $6.50/hog surge on the Sig 3. OlyW 17 & 19 as well as values out of Ontario were each up near $3.50/hog, while those based off 201-derived base pricing were $1-$2/hog higher. Pricing out of TCP/BP which is based on a 1-week lag saw values decline modestly with the BP2 down $0.50/hog while the BP4 edged $0.25/hog. In the US, Tyson values up $1/hog while those out of JM rose $4.50/hog.


Weekly Hog Margins

Hog margins improved on better cash however gains were tempered by a rise in feed costs. Farrow-to-finish feed costs rose between $1.25 to $1.50/hog on either side of the border in Canadian and US monitored regions. 


Calculated hog margins were most improved out of the Sig 5, up $2.50/hog. Margins out of the OlyW 17, 19 and Ontario which were each $2/hog stronger while those out of Hylife and the Sig 4 were only modestly improved. In the US, Tyson margins bettered $0.25/hog while JM margins were calculated $3/hog higher.

US Regional Margins

  • Tyson - $51.16 USD X 1.3457 = $68.85 in Canadian Dollars
  • Morrell - $52.44 USD X 1.3457 = $70.57 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.