Things to Consider….

US Cold Storage reported pork stocks at 459.9 million pounds for January, rising +10.6% or 44.0 million pounds over the previous report with current levels 165.6 million pounds or -26.5% under last year.

For reference, total pork in cold storage for December was revised from 408.4 to 415.9 million pounds.

Most pork categories tallied increased volume in cold storage for January.

Total hams accounted for the majority of the overall increase on the report, jumping 30.5 million pounds or +56.9% from December in a seasonal recovery however still 30.4 million pounds or -26.5% under year ago levels.

Picnics in cold storage climbed 1.9 million pounds for the same period, with current levels +25.2% over December however -11.5% or 1.2 million pounds under last year.

Trimmings recorded the greatest decrease from December, down 5.5 million pounds or -11.9% for January and was 12.1 million pounds or -22.8% under year ago levels.

Variety meats and the category for other pork also made modest moves lower on the month.

As shown, US pork stocks remain significantly below year ago levels, however volumes have been factored into existing lean hog futures values.  Producers should continue to consider a portion of hog price coverage for 2021 based on near contract high lean hog futures values.

  February 16, 2021

Weekly Hog Price Recap

Regional and national cash hogs improved much of the week with the strongest gains reported Tuesday/Wednesday, while CME cash improved daily. Most wholesale pork primals were up on the week, excluding ribs and loins, with strong rises in bellies and hams driving pork cutout $4.07/cwt over the previous week.  
 

Monitored hog markets were up $3 to $7 per hog on the week, with values out of Hylife up the most and followed closely by those out of Ontario. Quebec hog values rose $6/hog, while BP/TC was up closer to $5.50/hog and the Sig 4 up $4.50/hog from a week earlier. The OlyW 20 improved $5/hog while the OlyW 21 improved $3/hog. In the US, Tyson rose nearly $5.75/hog while values out of JM jumped $9.50/hog from the previous week.

Weekly Hog Margins

Monitored hog margins made significant improvements from last reported on strength in hog and pork values and were further supported by a reduction in feed costs. Canadian farrow-to-finish feed costs dropped $3.50/hog while those in the monitored US region were down nearly $2.50/hog from a week earlier.

Hog margins out of Quebec strengthened $9.50 to $4/hog losses, while those out of Hylife strengthened $10.50 to $4.50/hog losses. Margins off the OlyW 20 were up nearly $8.75 and the OlyW 21 improved $6.50, each near $11/hog losses to end the week. ML Sig 4 margins strengthened $8 to $14.50/hog losses while Ontario was up $10 to nearly $15.50/hog losses. In the US, Tyson margins strengthened more than $8.50 to $12.25/hog losses while JM margins were up $12 to $4.75/hog losses from a week earlier.                                                                                                                                                     

US Regional Margins

• Tyson: $ -12.24 USD X 1.2712 = $ -15.56 in Canadian Dollars
• Morrell $ - 4.73 USD X 1.2712 = $ -6.01 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.

Things to Consider….

Over the last 2 years there have only been 13 days where cut-out has spent time above $100 US per cwt with all those days being consecutive and considered short-lived.  

The sharp rally in the first few days of May 2020, when pork (and other meat) stocks were flying off the shelves due to panic buying, is the last time the market demonstrated signs of strong underlying support, until now.

Since the drop off following those $100 plus pork values, cut-out and CME cash have maintained a steady level of firmness as shown in the top graph.  The spread between pork and CME cash also spiked in May 2020 but since has maintained a difference between $10-20 US per cwt.  That spread today sits at $13.00 US per cwt, a healthy but reasonable differential.  The fact that any difference exists means packer do have some room for bidding up hogs should supplies dwindle, which is supportive to cash.   

The bottom graph illustrates the July 2021 Pork cut-out futures.  These newly reported future contracts have traded since November 2020 and are now providing some insight as to potential direction and value of pork prices into the coming months.  The Pork Cut-out futures also provide an idea on potential cash prices based on historical spreads.  Currently the cut-out to cash spread for both July contracts is roughly $6 US, cut-out at $100 and July lean hogs at $94 US per cwt.  The 2020 spread for July pork and cash is not the greatest year for making comparisons given what the market went through, and looking at 2019, the spread was between zero to $5 and even inverted at times between March and July.  B

Based on historical data a $5 spread is common for the summer months which imply July hogs are positioned well against cut-out.  Question remains however if both are upward trending or on their way down.  Based on the long-winded rally that began in mid-December 2020, it could be possible that both hog futures and cut-out take a break from the steady incline higher.

  February 23, 2021

Weekly Hog Price Recap

Cash hogs improved for much of the week, with national cash reporting stronger gains early on while regional cash was reported higher each day however went unreported Friday. CME cash improved daily, with stronger gains the front-half of the week. Wholesale pork primals also improved for the majority of the week, with pork cutout ending $3.62/cwt over the previous week.  
 

Monitored hog markets were generally up $8 to $11 per hog on the week, excluding markets derived from lagged base pricing. Values out of Ontario were up the most, $11.25/hog higher, followed by the Sig 4 which rose nearly $9.75/hog. Hog values out of Quebec, the OlyW 20 and Hylife were each up more than $8/hog, while the OlyW 21 rose $6.75/hog and BP/TC values climbed $4.50/hog from a week earlier. In the US, Tyson jumped $8.50/hog while values out of JM were up $6.50/hog from the previous week.

Weekly Hog Margins

Monitored hog margins recorded another week of significant strength on good gains in hog and pork values, however feeds costs increased modestly. Canadian farrow-to-finish feed costs edged $0.35/hog while those in the monitored US region climbed $0.55/hog from a week earlier.           

Quebec and Hylife managed to end the week with positive hog margins, each strengthening near $8 to $4/hog and $3.25/hog respectively. Margins out of the OlyW 20 were also up $8 but to $3/hog losses, while the OlyW 21 strengthened $6.25 to $4.75/hog losses from a week earlier. ML Sig 4 margins strengthened $9.25 to $5/hog losses while Ontario was up nearly $11 to $4.50/hog losses. In the US, Tyson margins strengthened more than $8.50 to $3.50/hog losses while JM margins were up $6 to $1.25/hog profits from a week earlier.

US Regional Margins

• Tyson: $ -3.62 USD X 1.2677 = $ -4.59 in Canadian Dollars
• Morrell: $ 1.29 USD X 1.2677 = $ 1.64 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.