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Market Commentary: Monday, July 15/19


Hog futures are trading higher in all months but August. Light-to-moderate follow-through support developed in hog futures as increased underlying technical support is developing through the complex following the strong market rally last week. This is helping to instill additional confidence in noncommercial traders that have been active in the market over the last few months, as well as spark renewed commercial buying interest. The ability to defend August futures at $80 per cwt will be closely watched as moderate-to-wide shifts may develop through the week with traders balancing long-term direction with opportunities for market correction.

Cash hog trade is called $1 lower to 50 cents higher, with most bids steady. Prices are lower on the National and unreported on the Iowa Minnesota morning reports. The morning cutout value is lower. Pork cutout values continue to erode lower as questions of follow-through pork demand in domestic and export markets are seen during the month of July. 

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

For Monday, July 15 the Western Hog Exchange Olymel 17 base price is $1.622/kg dressed and the Olymel 19 base price is $1.625/kg dressed. This is Kerrie Simpson reporting from the Western Hog Exchange. 

Weekly Regional HOG PRICE Report


Things to Consider….

As cash prices continue to soften into the mid summer months, the futures market appears to have registered a short-term bottom with most contracts gaining from the lows set in the past 10 sessions.

US federally inspected slaughter has trended closer to 2018 levels for the past 6 weeks, easing the amount on pork hitting the market.     Earlier in the year slaughter numbers became quite the concern with volumes well above the pervious year.     Traders now expect volumes to continue like 2018 throughout the summer with a possible increase to last year once into the 4th quarter.

Nearby August futures were able to claw back close to $5 US per cwt now trading just over $80 US per cwt.  At the same time December 2019, shown in the adjacent graph, managed to push back over $70 US per cwt providing some optimism for firm pricing into the 4th quarter of 2019 and first quarter of 2020.

Although December lean hog futures traded to a record $90 US per cwt and have since declined $20 US to trade at $70, producers need to keep in mind how high December remains compared to recent history.

The graph to the right illustrates the December lean hog futures for the last 5 years.  Today, Dec at $70 US per cwt is still well above any other Dec contract from the previous 5 years.  It certainly is not as high as the $90 reached back in April however from a risk management perspective, December remains at excellent value for forward contracting.

Producers should continue to look for ways to secure some protection for the end of 2019 and beginning of 2020. 

July 9, 2019

Weekly Hog Price Recap

Cash hog values fell all week on mostly moderate packer cash bid volume which peaked Wednesday. Regional cash pricing went unreported Friday on very light post-holiday. Wholesale pork values were generally weaker with lower belly, butt and ham values dragging pork cutout $0.67/cwt lower than a week earlier.

Hog markets were $9 to $13.50/hog lower with the OlyW 19 down the most from the previous week. Values out of Hylife and Ontario declined $11.50/hog, followed closely by the Sig 4 which fell $11/hog. The OlyW 17 fell near $10/hog, along with other markets such as those out of Quebec and the Sig 5. US-based Tyson values fell shy of $10/hog while JM pricing was down $4.50/hog.

Weekly Hog Margins

Monitored hog margins weakened significantly however reduced feed costs helped to offset a good portion of the week-over-week declines. Canadian farrow-to-finish feed costs dropped $3/hog while in the monitored US region were closer to $1.40/hog lower. 

Hog margins out of the OlyW 19 weakened the most, down $10.75/hog, while those out of Hylife, Ontario and the Sig 4 were each near $8/hog lower. Hog margins based off the Olyw 17 or out of Quebec weakened near $7/hog. In the US, Tyson margins were $8/hog lower while those out JM weakened $3/hog from a week earlier.

US Regional Margins

  • Tyson - $22.21 USD X 1.3086  = $29.06 in Canadian Dollars
  • Morrell - $16.56 USD X 1.3086 = $21.67 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.