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Market Commentary: Friday, December 7/18


Hog futures are trading higher today. Mixed trading ranges have been seen Friday morning with a combination of follow-through pressure and short covering at the end of the week. Lean hog futures have bounced back from strong morning losses as traders move back into the complex. February and April futures are leading the complex higher with firm support near 60 to 65 cents per cwt.

Cash hog bids in early trade are steady to $1 lower with most bids steady to weak. 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, December 7, the Western Hog Exchange OlyWest price is $1.246/kg dressed and the OlyWest plus price is $1.256/kg dressed. The OlyWest weekly price is $1.276/kg dressed and the OlyWest plus weekly price is $1.286/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.

Forward Contracting at Christmas/New Years

Re: Forward  Contracting for the holiday shortened weeks of December 23, 2017 to January 5, 2018

Dear Western Hog Exchange Producers,

Please be advised that due to the 3 day week during the Christmas break and 4 day week of New Years, Forward Contracting limits have been reached.
No further Forward Contracts will be taken for those weeks.

We recommend talking to Olymel Hog Bookings, early to schedule your loads. It may be advisable to ship early if that is possible for your operation.
They can be reached at: at (403) 343-8700 or 1 (877) 488-8700 ext 5281 or ext 5287.

Weekly Regional HOG PRICE Report


Things to Consider….

Last reported US Weekly Pork export data confirms that pork demand continues at a robust pace in most major buying regions.  Weekly data reported for the week ending Nov 23rd reported strong imports from China providing underlying strength resulting in the higher lean hog futures seen last week.  Although lean hog futures have taken a bit of a breather to start this week contract highs were again reached during trade last week.  

Aside from actual pork movement, recent reports have also indicated China has made some significant purchases of US pork, even with the 60 plus % of tariffs that exist on imported pork products from the US.     As of late China has reported purchases of 3,348 tonnes of pork to be shipped before the end of 2018 and confirmed purchases of over 9000 tonnes to be shipped in 2019.  The combined tonnage was one of the largest orders placed by China since earlier this spring.    As China has now reported its 70th case of ASF, there is concern that pork supplies for late in 2019 could be a concern. 

Although this information is deemed to be positive to the market, producers must remember that lean hog futures will already have factored in the data.  Further gains in the market are not expected based on the information reported above.  It would take another round of significant buying or additional orders to further propel the market beyond its current highs.

Not only has China been recording impressive import numbers but South Korea has become a dominant source of buying for the US pork market.  The graph illustrating Pork Exports Sales to South Korea shows a spike to nearly 6000 tonnes in one week back in early November, a volume only ever seen back in the summer of 2015.

The strong futures markets and relatively low Canadian dollar are providing excellent hedging opportunity for producers who are looking to reduce price risk for much of 2019.  Producers are encouraged to have a minimum of 25% hedged for the first half of 2019.

December 4, 2018

Weekly Hog Price Recap

Regional and national cash hogs began the week lower, with week-over-week declines offset in part by improvements reported midweek. CME cash however, reported lower values each day.     Daily cash bid volume was moderate with higher volume midweek. Wholesale pork values managed to improve from a week earlier, as most primal values strengthened following the holiday-shortened week. Pork cutout was $1.25/cwt higher from last week.

Despite firmer wholesale pork values, cash hogs declined as ample hog supplies pressured packer bids.     The WHE and Sig 5 were down$3.50/hog while pricing out of the east, such as those out of Ontario and Quebec, declined $2.75/hog. Remaining monitored hog pricing markets in Canada declined near $2/hog. In the US, Tyson fell $0.75/hog while JM pricing was calculated $3.50/hog lower.

Weekly Hog Margins

Falling hog values continue to pressure margins, dragging hog margins to 11-week lows. Feed added further weakness to margins, with farrow to finish feed costs up near $1/hog in Canada and near $0.70/hog higher in monitored US regions. Monitored Canadian hog margins weakened $2.75/hog to shy of $4.50/hog. Margins based off regional pricing declined the most, while prairie pricing based off the 201-report declined on the lower end of the overall range. In the US, Tyson hog margins were $1.50/hog lower while JM hog margins fell $4/hog.

US Regional Margins

- Tyson $(11.28) USD X 1.3279 = $(14.98) in Canadian Dollars

- Morrell $(19.37) USD X 1.3279 = $(25.72) 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.