Things to Consider….

Lean hog futures were mainly two sided over the past week, registering minor gains late last week while posting a solid positive day today.  As of Tuesday morning, the October and December contracts were testing the daily limits of $3.00 US per cwt trading up over $2.50 US with good volume.

Strength continued to flow into the futures on more news of African Swine Flu, which appears to be making its way into Europe over the past week.   News last week confirmed 2 cases of ASF in Belgium which is raising concerns that the spread of the disease is not yet contained.

On this side of the globe, slaughter numbers continue to run well above previous years, particularly in the US while Canadian slaughter remains relatively stable to previous years.

The graph to the top right illustrates Weekly Federally Inspected hog slaughter in the US.  As can be seen in the graph, kill numbers rose to a record 2.500 Million in August which is nearly 200,000 more than any other week in August.  The larger than normal kill numbers are expected to continue into the end of the year which remains a concern for pricing in the late 4^th quarter.  Although cash and futures markets are moving favourably against the large supplies, it should not be assumed the firm prices will last the entire rest of the year.     At some point in the near future, the large slaughter numbers and slowly increasing weights are going to become burdensome on the local market leading to another period of weaker prices.

Although the big kill may not impact prices immediately, expectations would be that later this year, closer to the holiday season, another round of weakness could appear.  Hog producers are encouraged to use the recent futures rally as a hedging opportunity to mitigate some risk during the winter months.

September 18, 2018

Weekly Hog Price Recap

Regional and national pricing reported solid gains much of the week, particularly Monday/Tuesday which reported increases of $2-$3/cwt. Daily cash bid volume was stable and moderate for the week.  CME cash values reported good strength as well however gained more late in the week compared to regional cash. Wholesale pork values improved with rising primals pushing cutout $2.49/cwt higher from the previous week's average.

Monitored hog markets surged as hog values rebounded from earlier weakness. On the Canadian side values out of the WHE and the Sig 5 improved the most, each rising $13/hog. The market values out of Ontario and Hylife also made significant increases, up $9/hog and $7/hog respectively, while other pricing up was near $4/hog. In the US, Tyson values rose near $10/hog while JM surged $20/hog.

Weekly Hog Margins

Hog margins improved on rising market values, further aided by reduced feed costs on the week.  Canadian farrow to finish feed costs fell near $3/hog while those south of the border fell shy of $2/hog.
 
 

Monitored Canadian margins made good improvements on the week, particularly markets based off regional pricing. The WHE and Sig 5 margins both improved $16/hog, while Ontario and Hylife margins strengthened $10/hog. Other CME-based markets such as the Sig 4 and pricing out of Quebec rose more than $7/hog. In the US, Tyson margins were improved by $11.50/hog while hog margins based out of JM surged near $20/hog.

US Regional Margins    

- Tyson $(26.43) USD X 1.3070 = $(34.54) in Canadian Dollars

- Morrell $(20.17) USD X 1.3070 = $(26.36) 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.