Market Commentary: Friday, July 23/21

Transcript

Hog futures are trading higher today. After having a tough trade throughout Thursday, the lean hog market has rallied support in its nearby contracts while the deferred continue to trend slightly lower. It's not concerning to see that packers weren't aggressive in Friday morning's cash hog trade, as they were aggressive in the cash market earlier in the week and want to see how next week's demand holds before they throw more money at chasing thin hog supplies.

Cash hog prices are unavailable on the National morning report and the morning cutout value is higher.  

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

For the week ending July 23, the Western Hog Exchange OlyWest 20 weekly price is $2.52/kg dressed, the OlyWest 21 weekly price is $2.56/kg dressed, and the BP4 price is $2.39/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.

Weekly Regional HOG PRICE Report

Things to Consider….

Total US pork exports climbed 32.8 million pounds or +5.0% from last reported as most major destination for US pork reported increases. Notably, the latest data for May reached a new high for the month historically. Compared to year ago levels, current US pork exports are up +11.3% however are -0.4% under last year-to-date. Some of the largest increases including destinations such as Mexico, China & Japan. Mexico rose 12.2 million pounds from the levels in April and represents the highest month recorded this year to date. Compared to last year Mexico was up +95.3% compared to last year; however for perspective, May 2020 was the lowest month recorded since March 2013 at 74.7 million pounds.

Mainland China increased their imports of US pork by 11.0 million pounds, while Hong Kong and Taiwan both recorded modest declines for an adjusted China* rise of 10.1 million pounds. Despite the significant drop from last year, down -38.3% from May 2020, current pork exports to China* remain significantly higher than more typical seasonal levels for this time.

US pork to Japan climbed 9.7 million pounds and was followed by increases to South Korea, Colombia and Honduras which were generally up 3.5 to 5 million pounds each on the latest report.

US pork to the Philippines dropped 9.0 million pounds or -23.1% lower, coming down considerably from the record highs of the previous two reports. US pork exports to the Philippines have been boosted by a reduction in tarrifs, with the latest report reflecting the 3rd highest month historically.

Lean hog futures have recorded back to back positive weeks while cash has also stabalized following the mid-June restructuring. Late year forward contract prices are now within $5-8 CAD per ckg of the early June top. Producers should look to be setting targets near the previous highs for late 2021 and early 2022 production.

July 6, 2021

Weekly Hog Price Recap

Cash hogs recorded significant declines throughout the week, with Tuesday representing the greatest daily decline for both national and regional cash. CME cash also faced lower values across the week, with stronger daily pressure early in the week. Wholesale pork values varied, however pork cutout managed to end the week $2.91/cwt over the previous week.

Market hog values fell again this week on weaker hog prices. The OlyW 21 declined more than $16.50/hog, followed by Ontario which fell $14.50/hog. The ML Sig 4 was down $13.50/hog, while the OlyW 20 was down closer to $13.25/hog from week ago levels and those out of Quebec were down $11/hog. Hylife declined $4.50/hog while BP/TC fell shy of $4/hog. In the US, Tyson was down $17.50/hog while JM dropped more than $25.50/hog from the previous week. 

Weekly Hog Margins

Canadian hog margins continue to be pressured by falling cash hog values and rising feed costs. Canadian farrow-to-finish feed costs rose more than $5/hog while those in the monitored US region climbed $2.50/hog from a week earlier.

Margins out of the OlyW 20 continue as the strongest monitored in Canada, which weakened $18.25 to $99/hog profits. Ontario hog margins declined more than $19.50 to $82.50/hog profits while those out of Quebec were down more than $16 to $80.25/hog profits. ML Sig 4 margins weakened $18.75 to $67.25/hog profits, while Hylife declined nearly $9.75 to $63.25/hog profits and the OlyW 21 dropped $21.75 to $59.75/hog profits. In the US, Tyson hog margins were down $19.50 to $109.50/hog profits while JM margins weakened more than $28 to $102/hog profits.

  US Regional Margins

  • Tyson $109.66 USD X 1.2367 = $ 135.62 in Canadian Dollars
  • Morrell $ 101.94 USD X 1.2367 = $ 126.07 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.

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