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Hog futures are trading higher in all months after a mixed to lower start. End-of-week short covering has been the main agenda of traders which continue to focus on bearish fundamentals, but are covering positions at the end of the week. With trade closed Monday for Presidents day, the focus on maintaining recent support levels is sparking renewed buyer interest in nearby trade. Nearby futures are holding 30 to 85 cent gains, while narrowly mixed moves in deferred trade is keeping additional volume on the sidelines.
Cash hog bids in early trade are expected to be steady to $0.50 lower; most bids are steady. Prices are unreported on the National and 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 Friday, February 15, the Western Hog Exchange Olymel 17 base price is $1.246/kg dressed and the Olymel 19 base price is $1.291/kg dressed. The Olymel 17 weekly price is $1.262/kg dressed and the Olymel 19 weekly price is $1.301/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange.
Things to Consider….
Following nearly a month of delays due to government shut downs, US livestock and meat trade data reported November pork exports at 513,478 thousand pounds, a rise of 11.7 million pounds from last reported. US pork exports tend to increase from October into November, however, historically have trended lower into the final month of the year.
Good figures of US pork were exported to South Korea helping drive overall exports higher on the report, rising 17.0 million pounds for November. The volume of November US pork exports to South Korea reached the third highest monthly figure reported in 7 years, only surpassed by levels reported in March and April 2018.
Volumes to Australia and Canada also reported noticeable increases from those for October, up 7.7 and 5.0 million pounds respectively. China was among other countries to increase their pork imports from the US, however, continue at levels well below more recent historical years for this time (excluding 2014).
Tempering a portion of the report-over-report rise were declines to major destinations such as Mexico, the Philippines and Japan. Despite the increase in volume to Mexico, which was reported 11.2 million pounds higher for November, US pork levels to the country are well below the previous two years for this time. Levels to Japan are also well below those reported in 2017 & 2018 for this time, with the latest report stating a 6.1 million pounds decrease from October. Pork volume to the Philippines was reported 6.7 million pounds higher, however is generally inline with recent historical years for the fourth quarter. US pork exports to the Philippines accounted for a 54.0% drop from the high range reached a month earlier, with that figure the highest monthly volume reported for the country since March 2014.
Exports as a percent of monthly production for November decreased 4.3% to 23.5%, bringing the figure 1.6% under last year. Production for the weeks of November averaged 535.3 million pounds, up 700 thousand pounds on average per week from October.
With lean hog futures near contract lows, limited opportunities exist for forward contracting. Producers are encouraged to hold off adding to any current protection while also using up any previously placed contracts for deliveries in the coming weeks.
February 12, 2019
Weekly Hog Price Recap
Cash hog pricing declined throughout most of the week. Regional and national cash hogs declined the most, with daily CME cash weakening more modestly overall. Cash hog bid volume was generally considered moderate throughout the week. Wholesale pork primals were weaker across the board, dragging pork cutout $1.86/cwt lower on the week.
Monitored Canadian markets faced another week of declines, generally down $1.50-$4/hog on the week. Markets derived from 201-base pricing declined the least, with Hylife and the Sig 4 each down near $1.50/hog, followed by closely by those out of Ontario. Market values based off the Sig 5 and BP/TCP4 fell $3/hog, while remaining markets were very near $4/hog lower. In the US, Tyson values were down near $1.50/hog while those out of JM declined near $2.75/hog.
Weekly Hog Margins
Hog markets continue to pressure margins lower, however feed costs managed to offset some of the overall weakness. Farrow-to-finish feed costs in monitored regions on either side of the border were near $0.80/hog lower on the week.
Of the monitored hog margins, those calculated out of the WHE 17 and Quebec weakened the most - each down more than $3/hog. Those based off the WHE 19 were shy of $3/hog lower, while margins out of the Sig 5 were down $2/hog. Remaining Canadian hog margins were generally near $1/hog lower from a week earlier. In the US, Tyson margins declined modest, down $0.25/hog, while JM margins were calculated $2/hog lower
US Regional Margins
- Tyson $(11.22) USD X 1.3191 = $(14.80) in Canadian Dollars
- Morrell $(20.01) USD X 1.3191 = $(27.83) in Canadian Dollars
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