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Market Commentary: Friday, May 17/19

Transcript

Hog futures are trading lower in all months. The lack of trade volume in the complex has continued to spark additional market softness with traders slowly covering gains made earlier in the week. Mixed trade within a narrow range that was seen through most of the morning has now shifted lower with prices steady to 90 cents lower. Most contracts are holding losses of 20 to 30 cents per cwt. The recent gains have sparked moderate to solid buyer support through the entire complex, allowing for expectations of follow-through support in the coming days. Even though the trade war with China continues to heighten, the focus on supplying pork to global markets will continue to underpin world and domestic price levels.

Cash hog bids in early trade are called $1 lower to $1 higher with most bids steady to firm. Prices are unavailable for the National and Iowa Minnesota morning reports due to report delays. The morning cutout value is higher.  

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

For Friday, May 17, the Western Hog Exchange Olymel 17 base price is $1.995/kg dressed and the Olymel 19 base price is $2.015/kg dressed. The Olymel 17 weekly price is $1.976/kg dressed and the Olymel 19 weekly price is $1.998/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Weekly Regional HOG PRICE Report

 


Things to Consider….


US livestock and meat trade data reported March pork exports at 515,412 thousand pounds, a rise of 63.1 million pounds or 13.9% from last reported in a seasonally expected move. This brings total US pork exports 22.7 million pounds under the figure last reported in March 2018, or 4.2% under last year. For comparison, current seasonal US pork export volume is considered strong and significantly higher than many historical years with current levels generally stronger than most of 2016 and earlier years.


        US pork exports to China* which in our reporting includes volume to the mainland, Taiwan and Hong Kong increased the most on the report, rising 15.9 million pounds from February. Mainland China alone was up 12.4 million pounds, +44% into March. US pork to Canada also increased strongly, rising 14.8 million pounds or a whopping 36.9% higher on the latest report. China* and Canada both improved their share of the total monthly figure, each up near 2% to 10.1% & 10.7% respectively.


        Volume to Japan also reported a notable increase from volume last reported, up 7.8 million pounds for March. Most other major destinations for US pork reported increased volume in March, generally 2.0 to 4.0 million pounds higher, with only Australia lower to fall 1.8 million pounds. 


        Pork production was stable to higher overall for the weeks of March, averaging 534.8 million pounds or 1.8 million pounds higher per week from the weeks of February. Exports as a percent of monthly production for March increased 2.9% to 24.1%, bringing the figure 3.2% over last year.


Although the volumes are not record breaking, they do suggest strong demand heading into the middle and latter part of 2019.     With futures back near the upper end of the range,  producers are encouraged to have some protection at these levels.

May 14, 2019






Weekly Hog Price Recap

Despite reporting daily gains throughout much of the week, cash hogs finished the week steady to modestly weaker. Packer cash bid volume was generally considered moderately good, with strong volume peaking Tuesday. CME cash also declined overall, with the start of last week reporting modest declines. Wholesale pork values improved overall, with only butt values weaker to bring pork cutout $2.27/cwt over a week earlier.




Monitored Canadian markets based off 201 derived base pricing generally reported the more modest declines. Values out of Hylife managed to remain largely unchanged from a week earlier, while the Sig 4 declined $0.25/hog. Values out of Ontario were down shy of $1/hog, while those out of Quebec, OlyW 17 & 19 were each down near $1.50/hog. Pricing out of TCP/BP which is based on a 1-week lag saw values improve with the BP2 up less than $0.25/hog while the BP4 rose $1.75/hog. In the US, Tyson values fell $2/hog while those out of JM were stable to near unchanged.


Weekly Hog Margins

Hog margin values were mixed from a week earlier, as moderate hog market value declines were mostly offset by a reduction in feed costs. Farrow-to-finish feed costs on either side of the border in monitored regions fell more than $1/hog. 


Calculated hog margins were the strongest out of Hylife, up near $1.25/hog, followed by the Sig 4 which was up $1/hog. Margins out of the Sig 5 and Ontario calculated more moderate improvements from a week earlier, while remaining Canadian margins including OlyW markets were down between $0.25-$0.50/hog. In the US, Tyson margins were near $1.50/hog weaker while JM margins were calculated $1/hog higher.

US Regional Margins

  • Tyson $50.90 USD X 1.3460 = $ 68.51 in Canadian Dollars
  • Morrell $49.29 USD X 1.3460 = $ 66.34 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.