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Hog Talk: Iowa Pork Congress · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_01: Welcome to the Hog Market Talk Podcast.
• 0:06
  SPEAKER_01: Your weekly deep dive into hog market fundamentals, breaking news, and industry insights.
• 0:12
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:20
  SPEAKER_00: All right, Luke, we're live.
• 0:22
  SPEAKER_00: First video podcast.
• 0:23
  SPEAKER_00: How's it going?
• 0:24
  SPEAKER_02: All right, it's going good, man.
• 0:25
  SPEAKER_02: How are you doing today?
• 0:26
  SPEAKER_00: We're doing really good.
• 0:27
  SPEAKER_00: Kind of like the hog market.
• 0:28
  SPEAKER_00: So we we're doing the hog market talk podcast here.
• 0:31
  SPEAKER_00: So let's just do a little breakdown on how you do it.
• 0:34
  SPEAKER_02: Before we do two things, we're thankful for.
• 0:35
  SPEAKER_02: We're thankful to be doing the podcast with you, Mike.
• 0:37
  SPEAKER_02: But I tell you what, sitting here in Laverne, Minnesota, I'm thankful we're inside, heated right now.
• 0:42
  SPEAKER_02: What is the temps outside right now?
• 0:44
  SPEAKER_00: Negative 20 outside this morning on the way to work.
• 0:46
  SPEAKER_00: That's frosty.
• 0:47
  SPEAKER_00: That is plenty frosty.
• 0:49
  SPEAKER_00: So good day to be inside for sure, up in the Northwest Corn Belt.
• 0:53
  SPEAKER_00: Uh the lean hog market, been pretty uh been pretty hot lately.
• 0:57
  SPEAKER_00: Kind of the opposite of that.
• 1:00
  SPEAKER_02: We've got some really good underlying things going on and some good things in our market, good things to be excited in, and and futures is pricing in some good things for sure.
• 1:08
  SPEAKER_00: Yes, it is.
• 1:09
  SPEAKER_00: But let's start with what you were doing most of this week, Luke.
• 1:12
  SPEAKER_00: Tell me about your time in Iowa this week.
• 1:14
  SPEAKER_02: Yeah, absolutely.
• 1:14
  SPEAKER_02: So this week was the Iowa Port Congress.
• 1:16
  SPEAKER_02: It's held in Des Moines, Iowa.
• 1:18
  SPEAKER_02: It's it's it's one of the bigger winner shows.
• 1:19
  SPEAKER_02: It's it's always a great event.
• 1:21
  SPEAKER_02: And you know, thank you for all our customers and all our allied industry friends that that came by and saw us at our booth.
• 1:27
  SPEAKER_02: We had some great discussions, saw a lot of uh old friends, a lot of current customers, and and met some new some new people on the way too, Mike.
• 1:34
  SPEAKER_02: So um, you know, as we went through the show, you know, again, our industry, we've got manageable supply, we've got outstanding demand, we've got good forward profits, corn's reasonable, meals reasonable, right?
• 1:46
  SPEAKER_02: We have a lot of things going good for us.
• 1:48
  SPEAKER_02: So, you know, hot topping points, you know, kind of through the industry.
• 1:51
  SPEAKER_02: Uh, you know, the cash hog market, it's kind of been slow to come because packers have been kind of playing it close to the vest, but we had some 86s and and we had a little better cash.
• 2:00
  SPEAKER_02: We had a few more players in the cash hog market, actually got some numbers to print this week.
• 2:04
  SPEAKER_02: So encourage more packers to get in that negotiated space and and continue to feed the volume like that's supposed to be.
• 2:11
  SPEAKER_02: But cash hog's good.
• 2:12
  SPEAKER_02: Um, you know, wean pig market, probably the talk of the trade.
• 2:15
  SPEAKER_02: I mean, the ween like wieners traded, you know, we're hearing 115s, we 110s, 113s, but you know, it's a big number, right?
• 2:23
  SPEAKER_02: So high demand for wean pigs right now.
• 2:26
  SPEAKER_02: You know, North Carolina uh has been having some pretty good breaks.
• 2:29
  SPEAKER_02: I bet it's North Carolina, it's not uncommon to have breaks there in the uh eastern cornbelt, some breaks, some breaks in the mid, you know, western cornbelt as well.
• 2:38
  SPEAKER_02: Just PERS.
• 2:39
  SPEAKER_02: PERS mainly, but we did PDV is worse this year than a year ago, too.
• 2:43
  SPEAKER_02: We did hear of just here midweek here or this week, some PVD breaks down in Oklahoma.
• 2:47
  SPEAKER_02: But long story short, uh, you know, wean pig demand is insatiable.
• 2:51
  SPEAKER_02: I mean, 110 bucks, that's a big number to pay for a ween pig.
• 2:55
  SPEAKER_02: Um, long demand lists, short so show lists, you know.
• 3:00
  SPEAKER_02: Now, with all that said here, I mean you can get all wrapped up in you know$100,$110 wean pigs, you know, but we also have$109 July futures,$108 August futures.
• 3:09
  SPEAKER_02: You know, we also have reasonable cost of productions, right?
• 3:11
  SPEAKER_02: So um, you know, that that it you know, if if if if if if the hog market was 90 and corn was was five bucks, it'd be a different number, right?
• 3:19
  SPEAKER_02: But uh uh definitely uh around a little under break even, but it's not uncommon to not have much margin in a summer wean pig either.
• 3:26
  SPEAKER_02: So, you know, rolling back into this, let's take a step back into where we're sitting.
• 3:30
  SPEAKER_02: Um, you know, the hog market's in a great spot, you know, still industry, you know, supply neutral on the source.
• 3:36
  SPEAKER_02: There are a few sow farms that are going to be built in 26, I think more likely weaning pigs in 27, but largely we've kept our our sow inventory in check.
• 3:45
  SPEAKER_02: Um uh meat demand still pork's in a really good spot, uh, competing well against uh well against beef.
• 3:52
  SPEAKER_02: Uh, we're seeing more demand for more pork cuts, you know, like the butt, the picnic, the ribs.
• 3:57
  SPEAKER_02: I mean, just finding more space.
• 3:59
  SPEAKER_02: So pork demand's in a good spot.
• 4:01
  SPEAKER_02: Corn's reasonable, it makes sense to make them big.
• 4:04
  SPEAKER_02: So weights are heavy, but it there's a logic behind it.
• 4:07
  SPEAKER_00: If you is weather affecting that this week a little bit, oh, a little bit.
• 4:10
  SPEAKER_02: Yeah, cold is a little bit tougher, right?
• 4:12
  SPEAKER_02: But I mean, it and it will, you know, it'll make the the trucks a little harder to start in the morning, and you have to make sure you got your number one in, right?
• 4:18
  SPEAKER_02: And all that.
• 4:18
  SPEAKER_02: But we can still a little we can manage it.
• 4:20
  SPEAKER_02: We can manage it.
• 4:21
  SPEAKER_02: It's it's different than you know, cattle outdoors or something like that.
• 4:24
  SPEAKER_02: We're pretty confined industry, but it had to take a little bit of kill off.
• 4:28
  SPEAKER_02: But you know, all in all, it's good.
• 4:30
  SPEAKER_02: Um, so we're we're we're we're super excited about that.
• 4:34
  SPEAKER_02: Um, you know, uh the biggest differentiator, I mean, 2026, the futures curve has already given you a phenomenal opportunity to hedge, right?
• 4:41
  SPEAKER_02: And and there's been a lot of hedging at these kind of prices.
• 4:44
  SPEAKER_02: We're big fans of it.
• 4:45
  SPEAKER_02: Industry's taking advantage of it, right?
• 4:47
  SPEAKER_02: What's going to define your actual 26 results is your health status, right?
• 4:51
  SPEAKER_02: Um, how healthy can you keep your sow herd?
• 4:53
  SPEAKER_02: And it's kind of like the tale of two sides, right?
• 4:55
  SPEAKER_02: You've got the farms that are humming and they're really humming, kicking out lots of pigs, but we've also, is the season right?
• 5:02
  SPEAKER_02: And you know, we get asked all the time, is PERS worse than last year?
• 5:05
  SPEAKER_02: Is it not worse than last year?
• 5:06
  SPEAKER_02: And and so that's a subjective hard thing to answer.
• 5:09
  SPEAKER_02: I mean, I would say from my perspective, let's just compare this year to last year.
• 5:13
  SPEAKER_02: All right, so last year PERS started in September, which was really early.
• 5:17
  SPEAKER_02: This year there were a few October breaks, but it really kind of kicked up in November, right?
• 5:21
  SPEAKER_02: So I'd say since November, um, you know, PERS is similar to last year.
• 5:25
  SPEAKER_02: Last year was bad.
• 5:26
  SPEAKER_02: So, you know, the two worse than the five-year average.
• 5:29
  SPEAKER_02: Definitely some health challenges.
• 5:30
  SPEAKER_02: PDV is a little worse year over year.
• 5:33
  SPEAKER_02: That one actually shows up in the University of Minnesota database.
• 5:36
  SPEAKER_02: It's that's a little easier to track on PERS positive, stable, not positive, stable, all that stuff.
• 5:40
  SPEAKER_02: So definitely some health demand, and it's reflecting in the ween pig market.
• 5:43
  SPEAKER_02: Usually the ween pig market, what's going to be really interesting is we're starting to pull into the August board, right?
• 5:49
  SPEAKER_02: And so usually you got another couple, two, three weeks, and then you usually get a seasonal drop as wing pigs pull off the October board, right?
• 5:56
  SPEAKER_02: Now, October, it's a different beast than it used to be.
• 5:59
  SPEAKER_02: We use a lot of cutout, which is great.
• 6:00
  SPEAKER_02: Big fans of using cutout in our price discovery, but it's it's making October act a little more like a summer month than a winter month, just because the function of how all that works.
• 6:09
  SPEAKER_02: But to me, what's going to be the you know interesting is you know, is PERS worse or not than a year ago?
• 6:14
  SPEAKER_02: How long does it last?
• 6:16
  SPEAKER_02: Last year, PERS went to July, which that's really long.
• 6:19
  SPEAKER_02: Usually we're cleaned up by then.
• 6:21
  SPEAKER_02: Well, you know, we're breaking hard again this week.
• 6:23
  SPEAKER_02: There's, I mean, the bug is tough.
• 6:25
  SPEAKER_02: So, how's that all shake out?
• 6:26
  SPEAKER_02: We'll see.
• 6:27
  SPEAKER_02: Um, but you roll it back around and you look at these kind of you know 108, 109 numbers.
• 6:32
  SPEAKER_02: October broke that 90 number, DC broke that$80 number.
• 6:36
  SPEAKER_02: You know, you've got July corn on the board at 443, D's corn at 455.
• 6:41
  SPEAKER_02: That's some competitive cost of productions.
• 6:43
  SPEAKER_02: A lot of great opportunity out there, Mike.
• 6:46
  SPEAKER_00: Well, I mean, despite the overbought conditions in the hog market here, I'll have Cade pull up like the uh February or June futures chart here, for example.
• 6:55
  SPEAKER_00: But uh, you know, April hogs gapped to new highs yesterday.
• 6:58
  SPEAKER_00: Uh we're finding some support there in that market.
• 7:01
  SPEAKER_00: We've had no meaningful corrections really since mid-December in this hog market.
• 7:06
  SPEAKER_00: And uh speculators are still adding to some of their long positions, Luke.
• 7:10
  SPEAKER_00: So I'm just curious on what your take is on the condition of these uh futures markets uh fundamentally and technically.
• 7:17
  SPEAKER_02: Yeah, you know, I think uh, you know, it's it's uh 114.
• 7:20
  SPEAKER_02: There's room to run up to 114 in the summer contracts from a chart perspective, like I think we're showing you here on the screen, right?
• 7:26
  SPEAKER_02: And and and all the things are happening.
• 7:28
  SPEAKER_02: The cash market's coming, cutout, you know, is is is coming.
• 7:32
  SPEAKER_02: So yeah, I think we can push up a little higher here, Mike.
• 7:35
  SPEAKER_02: I I am you know some optimistic.
• 7:37
  SPEAKER_02: Now, you know, you always get to you know, people like you know 130 and all this.
• 7:41
  SPEAKER_02: I'm not saying any of that's impossible, right?
• 7:43
  SPEAKER_02: But uh at 108, 109, we have good things dialed in.
• 7:46
  SPEAKER_02: Um but yeah, no, I'm a little optimistic.
• 7:48
  SPEAKER_02: You know, the feb at 88, I mean the index is trading 82, 83.
• 7:52
  SPEAKER_00: That's been impressive.
• 7:52
  SPEAKER_00: I a lot of people I think thought that was gonna stop around 85, didn't they?
• 7:56
  SPEAKER_02: Yeah, it did, but you know, pigs did tighten up.
• 7:58
  SPEAKER_02: I mean, I remembered it was it was the the week of New Year's, which hogs are always you know selling for the first week of the year, and that was the week where it went from I wasn't getting many calls from Packers to Packers saying, hey, we need a few pigs, right?
• 8:09
  SPEAKER_02: Yeah, and so so pigs are tight, supply is manageable, and I you know, I think that we're having to work a little harder, the packer that is, for pigs.
• 8:17
  SPEAKER_02: And you always it's once once you turn New Year's, I mean you're you're it's it's it's always a little different feel than Q4, Christmas, New Year's, Thanksgiving, all these things.
• 8:25
  SPEAKER_00: Pull up the hog slaughter chart on power.
• 8:27
  SPEAKER_02: Yeah, good job.
• 8:28
  SPEAKER_02: Pull up a hog slaughter chart.
• 8:34
  SPEAKER_02: So as it's coming up, what he's gonna show you is is it's not uncommon that you know those are our toughest times.
• 8:39
  SPEAKER_02: You know, the Christmas, New Year's snowstorms, I mean, that's when you're you know, it's always the toughest to get hogs in, and usually as we go in, you know, through Q1 and into the spring, supply gets more manageable and um and things get a little bit easier.
• 8:51
  SPEAKER_02: But we still need Saturdays, and that's what some of these packers are bidding up to fill.
• 8:55
  SPEAKER_02: Um, I think my case in point is is we've had a few Saturdays canceled, Mike, and it's a little early to be canceling Saturdays.
• 9:02
  SPEAKER_02: And the reason they're canceling is because that getting that hog to come out.
• 9:06
  SPEAKER_02: Now, there's reasons.
• 9:07
  SPEAKER_02: I mean, health has been kind of challenging, so inventory is a little tighter.
• 9:11
  SPEAKER_02: The futures curve is really, really high, Mike.
• 9:14
  SPEAKER_02: So it's telling you to keep putting uh weight on them, right?
• 9:17
  SPEAKER_02: Corn's reasonable, it's it's it's profitable to do it.
• 9:20
  SPEAKER_02: And then also, if you know, if you know, don't sell a pig light, like nobody's gonna go to 270, they're gonna push up a little higher to 295 if you have a choice, right?
• 9:29
  SPEAKER_02: And then if you, you know, if you do, if you you know, if you have to buy some spot pigs to fill in a hellful or whatnot, you know, they're a hundred bucks or better, right?
• 9:37
  SPEAKER_02: So just it's it's been a little harder to pull pigs forward.
• 9:39
  SPEAKER_02: So we're seeing a few Saturdays knockoff.
• 9:41
  SPEAKER_02: Schedule, try to do the Saturday, couldn't get them bought, because I have to pay too much to get them in.
• 9:46
  SPEAKER_02: You know, cut that back in.
• 9:47
  SPEAKER_02: My point with that is, and the pork cutout drives our pricing.
• 9:50
  SPEAKER_02: Um, you know, a few less Saturdays too.
• 9:52
  SPEAKER_02: That's supportive to the pork product, and that you know, that can help maybe get that product already really good in the mid-90s, but maybe get that kicked up.
• 9:58
  SPEAKER_00: It sure hasn't moved a lot lately.
• 10:00
  SPEAKER_00: I mean, it's been 94, 93 forever, I feel like.
• 10:02
  SPEAKER_02: It's well, forever.
• 10:03
  SPEAKER_02: I it's for a while, right?
• 10:04
  SPEAKER_02: Yeah, I mean, but it's still it's still, you know, we're just yeah, we're we're in a good spot.
• 10:08
  SPEAKER_02: Um, we're in a good spot.
• 10:09
  SPEAKER_02: So, you know, I think, you know, kind of just taken back, I've put a lot of bullish stuff out here today, and I am excited.
• 10:15
  SPEAKER_02: I am excited, right?
• 10:16
  SPEAKER_02: But again, these forward margins are outstanding, right?
• 10:20
  SPEAKER_02: You know, if if if you know futures make sense at these levels, I would say, even though I think there's some upside.
• 10:25
  SPEAKER_02: Windows, floors, windows make tons of sense, right?
• 10:28
  SPEAKER_02: But why do we hedge Mike?
• 10:30
  SPEAKER_02: Why do we manage risk?
• 10:31
  SPEAKER_02: It's for the things we can't see coming, right?
• 10:33
  SPEAKER_02: Everything we can see looks really good.
• 10:34
  SPEAKER_02: And let's use it, let's push it.
• 10:36
  SPEAKER_02: And the longer, harder this thing keeps running, the better chance.
• 10:39
  SPEAKER_02: I mentioned 26.
• 10:41
  SPEAKER_02: The board's giving us great opportunities, we can stay healthy.
• 10:43
  SPEAKER_02: 26 set up to be a good year.
• 10:45
  SPEAKER_02: The longer this thing runs, give us a runway into 27.
• 10:48
  SPEAKER_02: Let's keep pushing it out.
• 10:49
  SPEAKER_02: Give us a runway into 27.
• 10:51
  SPEAKER_02: You know, watch things.
• 10:52
  SPEAKER_02: I mean, clearly, you know, export, we still got a clear export.
• 10:56
  SPEAKER_02: Um, USMCA, you know it's gonna get renegotiated up by July, right?
• 11:00
  SPEAKER_02: And Trump's already working on that.
• 11:02
  SPEAKER_02: You know, anything you say, Mexico and your hog producer, you gotta listen.
• 11:05
  SPEAKER_02: Ears up, right?
• 11:06
  SPEAKER_02: And so, you know, next week's huge.
• 11:08
  SPEAKER_00: Trump's in the state of Iowa making a speech next week.
• 11:12
  SPEAKER_00: Uh, location is yet to be determined.
• 11:14
  SPEAKER_00: Main energy or main focus is gonna be on energy, but who knows what he'll throw in on the USMCA deal or uh potentially like E-15 year-round things like that.
• 11:24
  SPEAKER_02: Yeah, absolutely.
• 11:25
  SPEAKER_02: And you know, Mexico structurally, our hands work great to Mexico, but it doesn't mean if we get in a little political turmoil, they can't slow up purchases for a month or two or whatever that may be.
• 11:35
  SPEAKER_02: So, you know, just watch that, you know, keep doing the right things and taking risk off the table and and keep hammering forward.
• 11:40
  SPEAKER_02: But man, 26, I mean, it is really shaping up to have a lot of exciting things for the pork industry, Mike.
• 11:46
  SPEAKER_00: That it is, and you know, we talked about it before.
• 11:49
  SPEAKER_00: If you do get some of these things to come in, we are very overbought today now, technically.
• 11:53
  SPEAKER_00: So a a big enough pullback pretty quickly would would come uh pretty quickly.
• 11:58
  SPEAKER_02: Yeah, give yourselves some position, uh some opportunity to manage our positions, right?
• 12:03
  SPEAKER_00: For sure.
• 12:03
  SPEAKER_00: Thank you for your time today.
• 12:04
  SPEAKER_00: I appreciate it.
• 12:05
  SPEAKER_02: Thanks, Mike.
• 12:05
  SPEAKER_02: Take care.
• 12:07
  SPEAKER_00: Thanks for listening.
• 12:08
  SPEAKER_00: This podcast is available on Spotify and Apple, and now it is now launched on YouTube.
• 12:13
  SPEAKER_00: This week going forward, every podcast will have a video format available on YouTube as well to discuss charts and other things that we can show you while doing our podcast.
• 12:23
  SPEAKER_00: Thank you for listening.