Market Commentary: Friday, February 3/23

Transcript

Hog futures are trading mostly higher at midday. Hog futures are still showing signs of support after Thursday's export sales report named Mexico the top buyer, not horrible, but not enough to explain the new buying interest in hogs. The most bullish encouragement came from a bounce in the prices of negotiated hogs. With this bounce in cash hog prices coinciding with a successful test of support in the futures market, the outlook for hog prices is showing signs of improvement.

Cash hog prices on the National morning report are lower, the morning cutout value is also lower.

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

For the week ending Feb 3, the Western Hog Exchange OlyWest 20 weekly price is $1.74/kg dressed, the OlyWest 21 weekly price is $1.89/kg dressed, and the BP4 price is $1.82/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange

Weekly Regional HOG PRICE Report

Things to Consider….

The latest US Cold Storage numbers reported pork stocks at 458.1 million pounds for December, which was up 6.6m pounds from November however 61.7m pounds over year-ago levels. While current stocks have risen over lows recorded for the end of 2021, overall pork supplies remain low compare to more recent historical years (prior to 2020). Increased month-over-month quantities of bellies, trimmings, spare-ribs and bone-in picnics outweighed declines in remaining pork categories.

Beef in US cold storage rose 20.7 million pounds from the previous report, bringing beef stocks 36.8 million pounds over stocks reported at the end of 2021. Notably, total beef stocks for Dec 2022 are the second highest historically, behind the record reached Dec 2016 at 567.9 million pounds. Boneless beef accounted for the greatest portion of the monthly move, with beef cuts up more modestly in terms of weight. 

Total broilers were up 20.3 million for December, bringing them 188.9 million over a year earlier largely due to the surge in ‘other’ chickens. Current stocks of broilers in cold storage are among the highest historically.

Total chicken in US cold storage increased 16.5 million pounds on the month, bringing chicken 185.2 million pounds over year-ago stocks. Total chicken stocks are among the highest historically, behind highs recorded late 2018 & 2019. Lower quantities of leg quarters, drumsticks and thigh quarters were more than offset by increases in other chicken categories. Notably, chicken breast meat stocks finished the year +63.4% over December 2021 however are the second highest historically for the month of December (behind the historical high recorded at the end of 2020).

  January 31, 2023


Weekly Hog Price Recap

Cash hogs were mixed, with regional cash up the majority of the week while national cash fell the front-half of the week and recorded improvements in the latter half. CME cash recorded generally modest moves, however fell overall for the 13th consecutive week-over-week. Wholesale pork values improved overal, with lower picnics and ribs more than offset by rises in other primals. US pork cutout finished the week $0.86/cwt over the previous week's average.



Market hog values recorded another round of significant declines, generally $2-$6 per hog lower from the week previous. Markets derived from lagged base pricing yet again resulted in the greatest declines from a week earlier. The OlyW 20 dropped $5.85/hog, while BP/TC was down $5.50/hog and market hogs out of the OlyW 21 fell $4.30/hog. Hog values out of Quebec were $5.30/hog lower while those out of Ontario and the ML Sig 4 were each down shy of $4/hog, and Hylife was $2.15/hog lower. In the US, Tyson hog values slipped $0.70/hog while JM was up $1/hog from the previous week. 

Weekly Hog Margins

Monitored hog margins were generally supported by a decrease in feed costs. Canadian farrow-to-finish feed costs dropped $4.50/hog, while those in the monitored US region were down shy of $1.50 from the previous week.

ML Sig 4 margins improved $0.55 to more than $37/hog losses, followed by those out of Hylife which strengthened $2.35 to $39.25/hog losses. OlyW 20 margins weakened $1.40 to $40.45/hog losses, while the OlyW 21 edged $0.15 higher to $48.15/hog losses. Ontario hog margins climbed $0.65 to $51.15/hog losses, while margins out of Quebec were $0.80 weaker to more than $56/hog losses. In the US, Tyson margins improved $0.65 to $20.75/hog losses while JM strengthened $2.40 to $27.60/hog losses for the week.
 

US Regional Margins

  • Tyson: -$20.76 USD X 1.3362 = -$27.74 in Canadian Dollars
  • Morrell: -$27.61 USD X 1.3362 = -$36.89 in Canadian Dollars



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