Market Commentary: Friday, October 15/21

Transcript

Hog futures are trading higher at midday but well off the early highs. Given current price levels in futures, and building support in wholesale pork cuts, it appears nearby hog futures are at or near support levels. Traders are closely following nearby contract months as this will focus on demand levels through the end of the year. In addition, the shifting supply and demand situation during the first half of 2022 is helping stimulate late-week buyer interest. Pork export sales for the week ended Oct 7 were up 51% from the previous week and 9% from the prior four-week average. The leading buyers for the week include Japan, Mexico, China, and South Korea. 

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

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

For the week ending October 15 the Western Hog Exchange OlyWest 20 weekly price is $2.07/kg dressed, the OlyWest 21 weekly price is $2.29/kg dressed, and the BP4 price is $2.08/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

 

Things to Consider….

      In the latest report US Cold Storage reported pork stocks at 460.1 million pounds for August, which is down 4.9 million pounds or -1.0% under last year. The latest stocks reported were up +4.0% or 17.7 million pounds from July, largely due to the seasonal climb of hams in storage. For reference, total pork in cold storage for July was revised lower from 443.1 to 442.4 million pounds. 

      Total hams in cold storage rose 33.1 million pounds or +21.7% from last reported, with bone-ins up twice as much as the boneless variety. Hams in cold storage typically climb from March through September, and compared to year ago levels are +29.0% or up 41.8 million pounds. Other categories reported more modest increases from the levels recorded in July, such as butts which were up 1.9 million pounds or +16.5% higher and trimmings which climbed +3.8% or 1.4 million pounds higher. Bone-in picnics were up +17.0% or 785 thousand pounds higher, while total loins climbed +1.5% or 467 thousand pounds. 

         Offsetting a good portion of the overall increases were significant declines in bellies and spare-ribs as well as other, variety and unclassified pork categories. Bellies in cold storage dropped 10.3 million pounds or -37.0% from July levels, bringing current stocks 13.6 million pounds or -43.7% under year ago levels. Spare-ribs declined 4.7 million pounds or -7.7% for August, with ribs -9.8% or 6.1 million pounds under last year. Other Pork declined 3.3 million pounds or -6.3% from July, down -7.8% or 4.2 million pounds from last year.



  September 28, 2021


Weekly Hog Price Recap

Regional and national cash hogs fell throughout the week with heavier declines recorded mid-week and Friday down the least. CME cash also fell daily, however more moderately in comparison. Wholesale pork primals were mixed with bellies, ribs and hams helping pork cutout rise $0.85/cwt over the previous week's average.  


Canadian market hog values generally declined $5-$6 per hog, with those including lagged base pricing down more than other markets. Only Hylife improved, up $0.75/hog from a week earlier. The OlyW 20 fell $8/hog while the OlyW 21 and hog values out Ontario fell $6/hog, closely followed by the BP/TC which declined $5.75/hog. The ML Sig 4 was down $4.75/hog and hog values out of Quebec fell $4.25/hog. In the US, hog values out of Tyson fell $10.50/hog while JM dropped $14.25/hog from week ago levels.  

Weekly Hog Margins

Hog margins continue to weaken overall on significant declines in market values. Feeds costs influenced margins more moderately on the week, with Canadian farrow-to-finish feed costs up $0.25/hog while those in the monitored US region were down $0.25/hog. 

Hog margins out of the OlyW 20 weakened more than $8.25 to $55.50/hog profits. Margins out of Quebec were down $4.50 to more than $48.25/hog profits and Ontario weakened $6.25 to more than $44/hog profits. Hylife margins improved on the week, strengthening $0.50 to $43/hog profits. OlyW 21 margins declined $6.25/hog to more than $42/hog profits, while ML Sig 4 margins weakened $5 to more than $40/hog profits. In the US, hog margins out of Tyson weakened $9.75 to $36.75/hog profits while JM margins were $14 lower to $22/hog profits.
 

US Regional Margins

  • Tyson: $ 36.70 USD X 1.2744 = $ 46.77 in Canadian Dollars
  • Morrell: $ 22.08 USD X 1.2744 = $ 28.14 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.