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Hog futures tumbled lower midday as a combination of renewed technical selling and fundamental pressure quickly eroded morning optimism. The swift shift lower in morning cash hog prices combined with additional softness in pork values left traders unwilling to hang onto early gains as increased widespread weakness is developing. October lean hog futures posted a strong market reversal this morning, as triple-digit losses have moved to $63.20 per cwt at midday. The inability for front month futures to hold above these price levels at the end of the session would likely spark additional technical triggers early next week.
Cash hog trade is called steady to $1 lower, with most bids steady. Prices are lower on the National and higher on the Iowa Minnesota morning reports. The morning cutout value is lower.
The Canadian Dollar is trading higher against the US dollar at midday.
For Friday, August 16, the Western Hog Exchange Olymel 17 base price is $1.782/kg dressed and the Olymel 19 base price is $1.877/kg dressed. The Olymel 17 weekly price is $1.787/kg dressed and the Olymel 19 weekly price is $1.893/kg dressed. This is Pat Matthezing reporting from the Western Hog Exchange.
Things to Consider….
The USDA released their August WASDE (World Ag Supply Demand Estimates) on Monday and shocked the feed industry with higher corn acres and higher than expected yields. Planted corn acres were reported at 90 million acres, notably higher than the 88 million expected due to late planting and weather delays earlier this spring. More surprising was the fact that the USDA increased yield expectations to 169.5 bpa, which is only 7 bpa below the ideal conditions of last year. Many analysts and traders continue to question the USDA’s number as they reported 11.5 million corn acres as “Prevent Plant” acres which tallies the number of acres that were destined for corn but did not get put in. If these numbers were actually true, the Prevent Acres and actual acres would total 101.2 million acres of corn? Is that even possible? So based on some confusing data, and big yield estimates the market has reacted negatively as this news is very bearish. However, when combines roll in October, the market may see some adjustments from the currently traded numbers.
On the flip side, soybean planted acres came in 4.4 million acres lower than expectations however the overbearing bearish news for corn did not allow soybeans or meal to rally. Soybean planted acres were estimated at 76.7 million with trade estimates close to 81 million. Yields for soybeans were left unchanged from the July report at 48.5 bpa. For hog producers, now is an opportunity to buy good valued soymeal as the market could start to grind out some higher values into the fall months.
More estimates will be released in the coming months but for now, producers should look to secure the remainder of 2019 feed requirements at current values.
August 13, 2019
Weekly Hog Price Recap
Cash hog pricing continued their downtrend from the end of the previous week, declining generally daily through the week. Packer cash bid volume was considered mostly moderate, with higher volume reported Tuesday and Wednesday. CME cash also faced declines the majority of the week, however fell more moderately. Stronger wholesale bellies, ribs and hams drove pork cutout $2.26/cwt higher on the week.
Canadian hog markets were down $7/hog to as much as $10/hog higher on the week. Values out of Quebec were up the most, followed by the Sig 4 which improved $7/hog. Hylife values were up $4.50/hog while the OlyW 19 was up shy of $2/hog and Ontario was only marginally stronger. The OlyW 17 fell $7/hog and the ML Sig 5 declined $3/hog. In the US, JM values dropped $12.50/hog while Tyson fell $5/hog.
Weekly Hog Margins
Hog margins were mixed on the week, with markets on base prices derived from the 201 report typically stronger. Feed costs weighed on monitored margins, with Canadian farrow-to-finish feed costs up more than $1/hog while those in the US were up $0.25/hog.
Calculated hog margins out of Quebec improved the most, strengthening $9/hog, while those out of the Sig 4 and Hylife were up more moderately; $6 & $3.50 per hog, respectively. Hog margins out of the OlyW 19 improved a modest $0.25/hog, while Ontario weakened $0.50/hog. OlyW 17 weakened the most on the Canadian side, down more than $8/hog, and Sig 5 margins declined $4/hog. In the US, JM margins were calculated $12.75/hog weaker and Tyson hog margins were near $5/hog weaker.
US Regional Margins
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