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Market Commentary: Monday, October 21/19

Transcript

Hog futures are trading higher in all months, although it is uncertain just how deep any initial support is. Initial moves appear to be focused on short-covering activity. The potential for light to moderate buyer support moving into the complex exists as traders assess the questionable export news from last week. But right now it is uncertain just how credible these numbers are and how to measure future sales and export shipments to the recent numbers. This may add some uncertainty through the entire complex, although traders are pointing to generally bullish market indicators that domestic and global demand still has room for growth.

Cash hog trade is called $2 lower to $1 higher. Bids are scattered through the trading range. 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 higher against the US dollar at midday. 

For Monday, October 21 the Western Hog Exchange OlyWest 19 base price is $1.556/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Weekly Regional HOG PRICE Report

 


Things to Consider….


US Federally inspected hog slaughter reached the second highest level in history over the past week registering over 2.700 Million head.  Last weeks near record volume was only the second time US kill levels surpassed the 2.7 million mark.


Lean hog futures which have traded steady to firm in nearby months and firm to higher in deferred contracts have not been severely impacted by the record volumes.  With demand forecast to be near record levels heading into 2020, the market can absorb the massive number of hogs being slaughtered this month and projected for the 4th quarter of 2019.


Average slaughter weights continue to hover near 2018 levels which are not considered burdensome at this point in the year.  Weights are sitting right around the last 4-year average with expectations to continue seasonally higher as per usual with late season growth of hogs.


In any other year the current level of production being reported for October would be an extremely bearish factor with a likely negative impact on cash hog and future prices.  However, since the market is factoring in major declines in Chinese pork production, hog prices in North America are doing relatively well based on the amount of meat hitting the market.


The latest reports out of China have domestic production down 40% from a year ago with some private forecasters indicating it could be as much as 60-70% lower than a year ago.


With June 2020 lean hog futures at new highs, some protection is warranted but at the same time leaving a portion of production open to potentially maximize returns on a run once into the spring of 2020. 

October 8, 2019




Weekly Hog Price Recap

Cash hog pricing varied in the week however ended favourably higher than last week on early strength.
 CME cash by comparison improved daily but at a more moderate pace throughout much of the week. Wholesale pork values also advanced as most primals strengthened in value, helping push cutout $3.61/cwt higher. 



Monitored Canadian hog markets were generally $5 to $9 per hog higher than a week earlier on gains in cash hogs and the improved rate of exchange. Values out of the OlyW 17 and Quebec improved more than $9/hog, followed by those out of Ontario and the OlyW 19. Remaining monitored Canadian markets were up $5-$6 per hog from a week earlier. In the US, Tyson values weakened near $6.50/hog while JM fell $4.50/hog from a week earlier.


Weekly Hog Margins

Following two months of weakness, monitored margins managed to recover generally $4-$7 per hog. Improved margins were tempered in part by rising feed costs. Canadian farrow to finish feed costs were up $2.50/hog while those out in the monitored US region were up near $2 per hog from week ago levels. 

OlyW 17 and Quebec hog margins improved the most from the week previous, each strengthening more than $7/hog and followed closely by margins out of the OlyW 19 & Ontario. Margins calculated off the Sig 5 were up $4/hog while remaining margins were up $2-$3 per hog. In the US, Tyson hog margins strengthened $7 per hog while those out of JM improved $5/hog from the previous week.

US Regional Margins

  • Tyson: $ -17.45 USD X 1.3286 = $ -23.18 in Canadian Dollars
  • Morrell: $ -19.93 USD X 1.3286 = $ -26.48 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.





WHE Meeting Invite



WHE would like to invite you to a State of the Union PRODUCER meeting in your area.  The meetings will be held at:


Sandman Signature Lethbridge Lodge

Tuesday, November 5, 2019 

320 Scenic Drive South


Lethbridge, AB



Travelodge Strathmore

Wednesday, November 6, 2019 

350 Ridge Road


Strathmore, AB



Red Deer Radisson

Thursday, November 7, 2019 

6500 - 67 Street


Red Deer, AB



All Meetings:

12:30pm - Registration Opens 

1 to 4pm – Meeting

Refreshments will be served


WHE is hosting Regional Meetings to provide producers with updates on the industry, projects WHE is currently working on, and options that producers will have as their contracts expire.


WHY COME TO THIS MEETING?   The hog industry in Alberta and Western Canada is entering a critical stage.      Since WHE began to address this looming crisis, the infrastructure is now another year older, producers on average continue to lose money, and packers continue to fail to pay a Fair Price.     The contracts that the majority of hogs are marketed under are killing our industry.  Packers and other marketers continue to sell these old contracts using fear tactics and ‘shiny new toys’ while Quebec is being paid $20-25/hog more.


  • Come out to discuss these topics and more:
  • What can producers do if they want change?
  • What are their options when they allow their contract to expire?
  • Forward Contracting questions and options.
  • Open question and answer time.


Since these issues are issues facing all of Western Canada, we are inviting hog producers, regardless of where they ship their hogs, to join us in building a healthy and progressive hog industry.  Please bring along the people (elders and finance bosses, etc) who make decisions on your farm or colony


Please RSVP at glen.kropp@westernhogexchange.com so we have enough space and refreshments for everyone.