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Hog futures are trading sharply lower at midday. Active pressure is quickly moving into lean hog trade with triple-digit losses seen in most midday contracts as prices are $1.50 to $1.80 per cwt lower. The lack of support has moved July futures below last week's support levels posting the lowest prices since early March. Continued strong domestic production remains a long-term concern for the entire market with limited export demand likely from China in order to help tighten supplies. Even though China needs pork, the assumption that they would buy aggressively from us given the trade war tensions is misguided. Some future sales are expected to move to China, but until a trade deal is reached and relations improve, active exports to the country are not likely.
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 lower against the US dollar at midday.
For Friday, June 14, the Western Hog Exchange Olymel 17 base price is $1.839/kg dressed and the Olymel 19 base price is $1.869/kg dressed. The Olymel 17 weekly price is $1.832/kg dressed and the Olymel 19 weekly price is $1.878/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.
Things to Consider….
US livestock and meat trade data reported April pork exports at 524,520 thousand pounds, a seasonal increase of 9.1 million pounds or 1.8% from last reported. Although month over month exports were higher, total US pork exports are currently 23.4 million pounds under last year, or 4.3% under the historical high volume reached in Apr 2018 at 547,931 thousand pounds. For perspective, current US pork export levels are among the strongest reported historically, generally stronger than levels reported prior to 2018 with that year recording record high figures.
South Korea reported the greatest increase in their imports of US pork for April, up 14 million pounds or +23% from the previous month reported. US pork exports to mainland China was up 7 million pounds or 17% higher for April. Reduced amounts of US pork to other major destinations such Mexico, Canada and Japan nearly offset the overall rises reported in South Korea and mainland China. Pork to Mexico declined the most on the report, falling 9.6 million pounds or -7.6% from the figures for March. US pork exports to Canada fell 10.5% in April 5.8 million pounds less than levels reported on the previous report however remains significantly higher than other recent years for this time.
Lean hog futures have responded negatively to the recent reports of struggling pork exports and coupled with increased supplies are likely to continue under pressure until more data is released in the coming months.
As has been suggested in recent weeks, producers should remain patient for a recovery in the market to add to any existing protection for 2019.
June 11, 2019
Weekly Hog Price Recap
Cash hog values declined daily throughout the week on moderate to higher packer cash bid volume. Monitored cash markets were near $1 to $1.30/cwt lower from last week. CME cash was also lower each day, down $1.76/cwt from a week earlier. Good strength in wholesale loin and ham values were offset by declines in butts, ribs and bellies bringing cutout $0.15/cwt from last week's average.
Hog markets slid to lower values again with monitored Canadian markets generally $4-$7/hog weaker from a week earlier. Pricing out of OlyW and the ML Sig 5 were down the least, each around $4/hog lower. ML Sig 4 and Hylife values declined near $5/hog while those in the east were $6-$7/hog. In the US, Tyson pricing fell $4.50/hog while JM values were near $2.50/hog lower.
Weekly Hog Margins
Hog margins were pressured by lower cash hog pricing however found some support on a lessening in feed costs. Canadian farrow-to-finish feed costs declined $1.50/hog while those in monitored US regions were near $0.50/hog lower.
Hog margins out of the OlyW 17, 19 and ML Sig 5 weakened the least from a week earlier, down around $3/hog. Those out of Hylife and the Sig 4 weakened closer to $4/hog while Ontario and Quebec fell more than $5/hog. In the US, Tyson margins were calculated $4/hog lower while JM margins were down $2/hog.
US Regional Margins
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