Things to Consider….

     The latest US pork exports reported a 3.5% rise from the levels reported for August, with many major destinations for US pork reporting increased volume. Notably, total US pork exports reached a new high for the month of September historically.  

     US pork exports to Canada jumped 8.3 million pounds on the latest report, also reaching a new monthly high historically. US pork exports less imports from Canada for the month of September netted 17.8 million pounds, the largest US net on record for pork trade between the two countries. It is worth noting that the previous historical high was reached in March at 12.4 million pounds for the US, followed by 7.7 million pounds in April 2019 and 7.5 million pounds for September 2012.

     Many other major destinations for US pork increased volume as well, including China*, Mexico, Chile and Japan. China* increased imports of US pork by 3.9 million pounds, with the Mainland accounting for 2.5 million of the totals, while Mexico was up 3.8 million pounds for September. Chile rose 2.2 million pounds and Japan climbed 1.7 million pounds.

 The upswing in total US pork exports was expected as is illustrated by the Totals graph as seasonally the volume of exports bottoms in July and August before experiencing a return to the upside in September until the end of the year.  Pork exports from the US are expected to register higher numbers for the remaining 3 months of 2020.

The impact of Covid-19 has been felt around the World in all industries and forms of business.  Some being affected more than others and different impacts being registered based on geography.  The bottom graph summarizing European (Germany & Denmark) and North American (Canada & US) hog prices in CAD/kg, confirms that North America has faired much better than Europe post Covid-19 beginning.     There are other influences that have contributed to the weakness in Europe, namely ASF in Germany, but Canadian and US hog producers should understand the elevated levels of pork exports seen over the past year due to trade negotiations has benefited the bottom line compared to producers on the other side of the World.

November 10, 2020

Source: Pig333

Weekly Hog Price Recap

Regional and national cash declined for much of the week with some gains mid-week, while CME cash fell daily and was generally weaker early on. Wholesale pork values varied with significant declines in bellies, ribs and loins weighing on overall values, dragging pork cutout $3.32/cwt under week ago levels.  

Monitored Canadian hog markets declined on lower hog and pork cutout values. Hog values out of Quebec fell the most, down $16.50/hog, followed by the OlyW 21 and values out of Ontario which were each down near $13/hog. The Sig 4 declined $11/hog, Hylife was down $9.25/hog and the OlyW 20 was $8.25/hog lower. The BP/TC fell more moderately, nearly $2.75/hog lower from a week earlier. In the US hog values also fell, with Tyson values declining $3/hog while JM was down more than $3.25/hog from the previous week.

Weekly Hog Margins

Monitored hog margins weakened as hog and pork values slid lower and were further pressured by a rise in feed costs. Canadian farrow-to-finish feed costs edged $0.10/hog higher while those in the monitored US region were up near $0.50/hog from a week earlier. 

Margins out of Hylife weakened $9.25 to $24.50/hog profits and remain the strongest overall compared to other monitored markets, followed by the OlyW 20 which fell more than $8.25 to $23.50/profits. The OlyW 21 weakened $13.25 to $17.25/hog profits, while margins out of Quebec were down $16.50 to $16/hog profits. Hog margins based off the ML Sig 4 weakened $11 to $5.75/hog profits, while those out of Ontario were down $13 to $4.50/hog profits. In the US, Tyson margins weakened $3 to $4.50/hog profits while JM margins fell more than $3.75 to $3.25/hog losses.

US Regional Margins

• Tyson: $4.48 USD X 1.3126 = $5.88 in Canadian Dollars
• Morrell: $(3.24) USD X 1.3126 = $(4.25) 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.

Things to Consider….

With the US Federal election now mainly behind us and President-Elect Joe Biden expected to be inaugurated on January 20, 2021 as the 46^th American President, the market can once again focus on key fundamentals of the industry for establishing the next possible move in pricing.

Although the last couple of weeks have been somewhat negative, the market appears to be stabilizing with pork cut-out posting multiple positive days late in the week after 10 days of lower reported values.  Cash hog prices also appear to be leveling off as regional prices register minor gains.

After reaching what could be considered the near-term high of $101.42 in mid-October, pork cut-out has declined nearly $20 US per cwt in a similar time frame where cash hog prices, as measured by the CME index have only dropped $7 US per cwt.  The price spread graph shown here illustrates that cut-out and cash have narrowed to within $11 US, the narrowest margin seen since early April 2020.  Packers appear willing to pay for hogs heading into the back half of the final quarter of 2020 giving up some of the huge margin witnessed over the last 7 months.

Cash hog prices which nearly reached $80 US per cwt, recorded the highest daily price since Aug 15^th, 2019, over 14 months ago.  The positive move was welcomed by all producers north and south of the border as margins remained thin and sporadic for most regions for several months.     Those markets that included some form of cut-out value, be it a percentage or premium linked to cut-out performed slightly better during the challenging times, but as can be seen in the data below, the impact of cut-out based prices have eased this week with the narrowing as mentioned above.

If cash hog prices and cut-out are to trade “more normal” regarding their spread between each other, the price discrepancies seen between regions will lessen.  However, if cut-out once again decides to “run away” from cash the spread will again appear, and certain regional prices will outperform others.

November 3, 2020

Weekly Hog Price Recap

Regional and national cash generally improved for the better part of the week however mid-to-late week declines weighed on earlier gains, while CME cash by comparison fell daily. Wholesale pork values also fell, particularly bellies which dropped $41.01/cwt, driving pork cutout $9.74/cwt under week ago levels.  

Monitored Canadian hog markets generally fell on the week, excluding the BP/TC pricing which edged more than $0.50/hog higher. Pricing out of Hylife declined the most, falling $18/hog, followed by values out of Quebec which dropped more than $17.50/hog. Ontario fell more than $5.25/hog while the Sig 4 declined $2.50/hog. Pricing out of the OlyW was down more moderately, with the 2021 $0.60/hog lower while the 2020 was $0.25/hog lower. In the US hog values also fell with Tyson values declining $2/hog while JM was down $2.50/hog from the previous week.

Weekly Hog Margins

Monitored hog margins were mixed as lower hog values were buoyed by a decline in feed costs. Canadian farrow-to-finish feed costs edged $0.80/hog lower while those in the monitored US region dropped $1.65/hog from a week earlier. 

Margins out of Hylife weakened the most from the previous week, down $17.30 to $33.70/hog profits and remain the strongest compared to other monitored markets. Margins out of Quebec and the OlyW also finished the week with stronger profits overall, with Quebec weakening nearly $17 to $32.65/hog profits, the OlyW 20 up $0.50/hog to nearly $32/hog profits and the OyW 21 up $0.20 to $30.50/hog profits. Margins calculated out of Ontario declined $4.50 to $17.50/hog profits while the ML Sig 4 weakened $1.80 to nearly $17/hog profits. In the US, Tyson margins edged modestly stronger to nearly $7.50/hog profits while JM margins fell $1 to $0.65/hog profits.

US Regional Margins

• Tyson: $ 7.44 USD X 1.3267 = $ 9.87 in Canadian Dollars
• Morrell: $ 0.64 USD X 1.3267 = $ 0.85 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.