Market Commentary: Thursday, June 17/21

Transcript

Hog futures are trading lower at midday, sharply lower in the front months. The hog market didn't fare well after seeing the morning's export report as it was disappointing to see that China wasn't among one of the largest buyers. Pork net sales reported were up 49% from the previous week and 8% from the prior four-week average. The three largest buyers were Mexico, Japan, and South Korea. The market's run of weaker pork cutout prices alongside a disappointing export sales report has traders leery of the market and they're unwilling to support the market for the meantime.

Cash hog prices are lower on the National morning report and the morning cutout value is higher.  

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

For the week ending June 18, the Western Hog Exchange OlyWest 20 weekly price is $2.64/kg dressed, the OlyWest 21 weekly price is $2.71/kg dressed, and the BP4 price is $2.44/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

 

Things to Consider….

Renewed strength in cash hog markets and lean hog futures has been a result of a strong pork market which has now surpassed the record highs registered in 2020 which was the result of pork processing plant closures and delays in product availability.  As illustrated by the USDA cutout graph 2021 pork value gains have been nearly linear with positive movement starting in January and carrying forward to the highs registered in early June.  Although certain cuts like loins have not surpassed 2020 other parts of the carcass have made tremendous gains recording unseasonal highs earlier in the year than normal.  In recent days, cut-out has shown signs of reaching a potential top for the year but prices remain well above the 5-year average.

So far in 2021 there have been a few disruptions in Canadian slaughter levels, noteably in May however US processors have been successful in keeping the chains moving and capacity to near the allowable maximum relative to supply.

With Canadian slaughter levels expected to maintain similar levels to 2020 and US levels tracking between 2019 and 2020 levels, capacity (like previous years) is not projected to be a major bottle neck to pork production once into the 4th quarter.

With weekly capacity south of the border now over 2.700 Million and Canadian capacity surpassing 450,000, slaughter projections for late in 2021 are not expected to test capacity providing underlying support to the overall market and meat price.  Markets will remain volatile however a firm tone is expected to continue through the summer months.

  June 1, 2021


Weekly Hog Price Recap

Regional and national cash hogs declined throughout the week with greater declines recorded mid-week, while CME cash recorded more moderate daily moves however was higher each day. Wholesale pork values improved across all primals with hams, butts and bellies up the strongest. US pork cutout finished $6.59/cwt over the week previous.  



Canadian market hog values improved overall with those out of Hylife up the most, rising $9/hog. Values out of Ontario and the OlyW 21 were each near $3/hog higher, followed by BP/TC which was up $2/hog. ML Sig 4 climbed $1.50/hog higher while hog values out of Quebec were up $1.25/hog. Only the OlyW 20 recorded a decline north of the border, edging $0.25/hog lower. In the US, Tyson dropped $7.75/hog while JM fell $8.25/hog from the previous week.

Weekly Hog Margins

Canadian hog margins improved significantly this past week, supported by a reduction in feed costs. Canadian farrow-to-finish feed costs declined $1.75/hog while those in the monitored US region fell modestly less at $1.50/hog lower than a week earlier.

Hog margins out of the OlyW 20 were up $1.50 to $87.50/hog profits, followed by margins out of Ontario which strengthened shy of $5 to $81.25/hog profits and Quebec which increased $3 to $77.25/hog profits. Hylife was up more than $10.75 to $69.50/hog profits while the ML Sig 4 strengthened $3.25 to $ 66.25/hog profits and the OlyW 21 was up $4.75 to nearly $61/hog profits. In the US, Tyson hog margins weakened $5.50 to $93.75/hog profits while JM margins declined $6.75 to $91.75/hog profits from a week earlier.

US Regional Margins

  • Tyson: $ 93.84 USD X 1.2082 = $ 113.38 in Canadian Dollars
  • Morrell $ 91.80 USD X 1.2082 = $ 110.91 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.





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