Latest / Professional Ag Marketing Podcast / Keeping an Eye on Mexico | Hog Talk March 5th, 2026

Transcript

Keeping an Eye on Mexico | Hog Talk March 5th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_01: Welcome to the hog market talk.
• 0:06
  SPEAKER_01: Your weekly deep dive into hog market fundamentals.
• 0:09
  SPEAKER_01: Breaking the inventory.
• 0:12
  SPEAKER_01: Breaking the market involved with potential risk of loss that is not doable for all investors.
• 0:21
  SPEAKER_02: All right.
• 0:22
  SPEAKER_02: I've got Mike Fitzgerald here with us on March 5th already.
• 0:26
  SPEAKER_02: Mike, you are in our branch office in Mechanicsville, Iowa, in the eastern part of the state.
• 0:31
  SPEAKER_02: Uh just how long have you been with us at Professional Egg Marketing now?
• 0:35
  SPEAKER_02: Just a little background for our listeners.
• 0:37
  SPEAKER_00: Yep, 11 years I've been with ProAg.
• 0:39
  SPEAKER_00: 11 years.
• 0:40
  SPEAKER_00: Nice.
• 0:41
  SPEAKER_02: And before that, what were you doing?
• 0:43
  SPEAKER_00: I worked for Cargill on their pork procurement team, and I was primarily based out of Wichita, Kansas.
• 0:51
  unknown: Okay.
• 0:52
  SPEAKER_02: So you were a bad guy.
• 0:53
  SPEAKER_02: Now you're a good guy for the last 11 years here, anyway.
• 0:58
  SPEAKER_02: So we're going to talk about the hog market a little bit here today.
• 1:00
  SPEAKER_02: We're just going to talk about some of the futures activity recently.
• 1:03
  SPEAKER_02: We're going to talk about the margin environment, a little bit about the weekly exports, numbers here, talk about cutout a little bit as well in there, then wrap up kind of talking about the cash and slaughter side of things.
• 1:15
  SPEAKER_02: So, Mike, I want you to walk us through what you've been seeing on contract life highs here, especially in those summer months on out.
• 1:21
  SPEAKER_02: We've seen some pretty nice appreciation recently on this hog market.
• 1:25
  SPEAKER_02: What can you tell us about where this market's sitting at health-wise?
• 1:29
  SPEAKER_00: Yeah, there's been a lot of positive momentum in these hog futures this week.
• 1:35
  SPEAKER_00: July hog futures, all the way out into the extreme deferred contract months, all made new highs this week.
• 1:44
  SPEAKER_00: I think there's there's a variety of reasons, obviously, as to why that could be taking place.
• 1:50
  SPEAKER_00: Um it probably segues in a little bit from what's been going on in the cattle world.
• 1:58
  SPEAKER_00: And I don't necessarily need to make this be a cattle discussion by any means.
• 2:02
  SPEAKER_00: Um, but boxed beef values have gone up a lot.
• 2:06
  SPEAKER_00: I do think that has helped us in the short term at least.
• 2:10
  SPEAKER_00: Um with trying to get this cutout value moved up.
• 2:14
  SPEAKER_00: I think otherwise we've seen we've seen some really noticeable improvements going on with Mexico and their live hog market prices.
• 2:26
  SPEAKER_00: And I know we wanted to spend just a minute kind of diving into those prices a little bit, but obviously Mexico is our largest, other than domestic demand, right?
• 2:39
  SPEAKER_00: 75% of all of our pork is is primarily consumed here in the US.
• 2:43
  SPEAKER_00: Uh, 25% of that goes into the export market, and Mexico alone takes just under half of that.
• 2:49
  SPEAKER_00: So we do need to keep our finger on that one just a little bit and keep keep our keep our mind wrapped around what's the what's the tone of the industry down there.
• 3:01
  SPEAKER_00: And as you can see from that chart, um Mexico hog prices have been climbing recently.
• 3:08
  SPEAKER_00: And you know, you look back on that thing.
• 3:10
  SPEAKER_00: I mean, there's there's eight years of data on that graph.
• 3:15
  SPEAKER_00: They're the highest they've been at yet.
• 3:17
  SPEAKER_00: These are these prices are higher than what they were at last summer.
• 3:21
  SPEAKER_00: Um, you know, a lot of the talk going on in the industries, they they did experience a lot of liquidation in their sow herd over the last year.
• 3:29
  SPEAKER_00: They had a lot of health challenges, same things that we're all familiar with here in the US with PERS and PED.
• 3:35
  SPEAKER_00: But I like that one just because we have some fears, you know what I mean, as we as we head into this summer as to how aggressive Mexico can or will be at buying U.S.
• 3:49
  SPEAKER_00: pork, especially if uh USMCA review comes into play.
• 3:54
  SPEAKER_00: And that chart would suggest we're okay, you know, that that demand for pork should be really good, especially from them.
• 4:01
  SPEAKER_02: Are you worried about the USMCA deal and any potential risk there?
• 4:05
  SPEAKER_02: Do you think uh we're sitting in a pretty good, comfortable spot in the agricultural industry going forward?
• 4:11
  SPEAKER_00: I I am a little worried about it.
• 4:13
  SPEAKER_00: Maybe I am, maybe I'm overly worried about it, but that's just part of the world that I part of the world that I would worry about.
• 4:22
  SPEAKER_00: Um I don't think it would, if anything gets in the way, I don't think imagine it would be a long-term issue.
• 4:29
  SPEAKER_00: It would be short term and just cause a little bit of displacement.
• 4:33
  SPEAKER_00: But when they are such a big percentage of all of our pork sales, any little hiccup along the way could could be tough.
• 4:41
  SPEAKER_02: Agriculture in general, remember, you know, they're our biggest buyer when it comes to the corn side too.
• 4:45
  SPEAKER_02: And they've been front loading pretty hard this year.
• 4:48
  SPEAKER_02: Uh, been buying a lot of corn, probably a little bit higher than normal, just based upon they're feeding quite a few cattle down there.
• 4:54
  SPEAKER_02: They maybe didn't plan to as well.
• 4:56
  SPEAKER_02: So uh yeah, they've been a pretty big market for our ag commodities here, uh, year to date so far.
• 5:01
  SPEAKER_00: Yep.
• 5:03
  SPEAKER_02: How about on the uh on cutout?
• 5:05
  SPEAKER_02: When you start to look at just demand overall, not just on the export side of things, you mentioned it a little bit because of the beef side.
• 5:11
  SPEAKER_02: We've seen some massive appreciation, and we talked about that in the cattle podcast before this as well.
• 5:17
  SPEAKER_02: But uh, what do you see out of the pork cutout both right now and seasonally?
• 5:21
  SPEAKER_00: Yeah, pork cutout right now made a new year-to-date high.
• 5:25
  SPEAKER_00: Obviously, we only have about eight or nine weeks in the data set, but it did hit a new water high watermark for the year.
• 5:32
  SPEAKER_00: Um seasonally, this is a time of year where I don't expect a lot of upside momentum.
• 5:41
  SPEAKER_00: I mean, it is this Easter Lent season.
• 5:45
  SPEAKER_00: Um, I'm not sure that has to be the only reason as to why pork a lot of times struggles in March and April.
• 5:50
  SPEAKER_00: But looking at that graph and paying attention to that gray shaded area in the background, having a lot of upside here is usually relatively small.
• 6:00
  SPEAKER_00: We the the new high we had, I think that helped add to some of this bullishness that the hog futures have been seeing here over the last week.
• 6:10
  SPEAKER_00: But remember, when you talk about big picture or little picture things, the cutout right there was 98.62.
• 6:17
  SPEAKER_00: I mean, you go back to January 2nd, I think we were 9560 or just under 96 at that point in time.
• 6:24
  SPEAKER_00: We're only a couple dollars higher over the past few months, and hog futures continue to tell us that things are going to get better yet.
• 6:33
  SPEAKER_00: Um, but I again historically you'd be a little cautious about that optimism.
• 6:39
  SPEAKER_02: When's when's go time on that then?
• 6:40
  SPEAKER_02: When do you really need to start seeing that go up to make both like April or the summer months look correct?
• 6:46
  SPEAKER_00: Um, go time typically would be April 20th and after.
• 6:51
  SPEAKER_00: And that the reason why is because that is when the U.S.
• 6:55
  SPEAKER_00: hog industry starts to have less numbers around, not necessarily because of health challenges, just seasonally we have less numbers around.
• 7:03
  SPEAKER_00: That is kind of the line in the sand that you would draw to where we no longer have enough pigs to kill on Saturdays after about April 20th.
• 7:13
  SPEAKER_00: And every week going forward from that point in time, you wouldn't even have enough pigs to kill Monday through Friday.
• 7:21
  SPEAKER_00: So you're you're combining less supply, you're comp you're combining uh warmer temperatures out and less carcass weight kind of going forward, and then you're colliding that all with summer grilling season as you're heading out.
• 7:35
  SPEAKER_00: So that's when the cutout usually starts to pick up some momentum between now and then.
• 7:40
  SPEAKER_00: We got plenty of pigs around.
• 7:41
  SPEAKER_00: And as long as Mexico is going to be around here for the next few weeks, I feel better about kind of holding ourselves here.
• 7:48
  SPEAKER_02: Speaking about some of the near-term fundamentals here, I want to go over to the cash market and just have you walk me through what you're seeing here recently on that side of the world, Mike.
• 7:58
  SPEAKER_00: Yeah, not a lot to talk about on the cash market side of things.
• 8:02
  SPEAKER_00: It has been good.
• 8:03
  SPEAKER_00: Um, there is there is lots of packer participation today in the spot market.
• 8:09
  SPEAKER_00: They they have needs to help them fill these Saturday kills.
• 8:13
  SPEAKER_00: Um, weighted averages, I believe last week it was that they made a new year-to-date high.
• 8:18
  SPEAKER_00: I don't believe we've crossed that quite yet this week.
• 8:21
  SPEAKER_00: Yesterday was confidential on the cash market reporting, um, even with decent volume.
• 8:26
  SPEAKER_00: The highest paid price has been around 93 for the last few weeks.
• 8:31
  SPEAKER_00: Uh, so when you have cash market at 93 and you had the cutout, I mean you go back a week ago, the cutout was around 96 or 7.
• 8:38
  SPEAKER_00: Those two are getting really, really close together.
• 8:41
  SPEAKER_00: So as long as we require Saturday kills from a supply point of view, I don't expect a lot of big movement in the cash market, at least until you get to that April 20th and after.
• 8:54
  SPEAKER_02: Gotcha.
• 8:55
  unknown: Yeah.
• 8:56
  SPEAKER_02: How about slaughter in general?
• 8:58
  SPEAKER_02: Uh, how does it look going forward and what you've seen recently on just the overall numbers, Mike?
• 9:04
  SPEAKER_00: Um, yeah, slaughter, I've I believe for the last month or so we've been harvesting very, very similar numbers to year-ago levels, right?
• 9:12
  SPEAKER_00: You look at that graph and you can see the blue and the green lines are kind of crisscrossing back and forth.
• 9:17
  SPEAKER_00: When this week is said and all said and done, we will have harvested, I believe, more pigs year over year in this particular week.
• 9:26
  SPEAKER_00: Um, but very similar numbers.
• 9:28
  SPEAKER_00: I I wouldn't expect a lot of change in that until we get perhaps to the summer months.
• 9:34
  SPEAKER_00: And that's where everybody in the hog industry right now is really talking about health challenges and expensive weaned pig prices.
• 9:43
  SPEAKER_00: I mean, we had$124 was the type topside of weaned pig prices again last week.
• 9:51
  SPEAKER_00: As we get out into summer, I believe that's the highest weaned pig prices in the last couple weeks that we've ever seen before in history.
• 9:59
  SPEAKER_00: I mean, clearly there's um clearly there's a little bit of a supply issue here, and the margin on that particular weaned pig would be in negative territory right now as we're starting to move those into the October contract.
• 10:12
  SPEAKER_00: So again, just supply-wise, our industry still seems like it's in a really good spot and friendly from that point of view.
• 10:19
  SPEAKER_00: Gotcha.
• 10:20
  SPEAKER_02: Very interesting.
• 10:21
  SPEAKER_02: Um, as we start to wrap up the podcast just a little bit, I wanted to re-illustrate something as we look back at the futures market.
• 10:29
  SPEAKER_02: Something that makes the hog market pretty unique this week is a lot, if not all, of the other egg and other commodities in general have been very responsive to any of the IRAN more news.
• 10:41
  SPEAKER_02: However, the hog market, Mike, it almost seems like it's been insulated from that.
• 10:45
  SPEAKER_02: It hasn't traded very volatile this week, and it seems like it hasn't cared about that news.
• 10:50
  SPEAKER_02: I don't know what you have to say about it, but I guess when I've been looking at it, it seems like it's only the input side of things that's been really fluctuating for these hog producers.
• 10:59
  SPEAKER_00: Yeah, for sure.
• 11:00
  SPEAKER_00: I I mean it really has been only the input side that's been fluctuating for them some.
• 11:05
  SPEAKER_00: I was a little concerned when I saw cattle futures selling off as hard as they were, that maybe that would trickle into the pork side some.
• 11:12
  SPEAKER_00: Um those those cattle and stock market, things like that, they do tend to get tied together a little bit more than what the hog complex would.
• 11:22
  SPEAKER_00: Um, but right now, I guess I I I don't see how the US-Iran situation will have a big impact at all on what's going on in our pork world today.
• 11:34
  SPEAKER_02: The only thing I was thinking of was the uh we've got a pretty sizable managed money long position still in this hog market, both for managed money and for the index funds.
• 11:45
  SPEAKER_02: Uh, are you worried over a certain roll timeframe coming here that they're gonna try to roll completely out of some of those positions and take a little bit more risk off, you think?
• 11:53
  SPEAKER_00: Yeah, good question.
• 11:55
  SPEAKER_00: Uh you're you're correct.
• 11:56
  SPEAKER_00: We do have a very big bought position today in the lean hog contract on that on that table that you're showing there.
• 12:03
  SPEAKER_00: The the February 24th showed we had almost 117,000 contracts bought.
• 12:09
  SPEAKER_00: Outside of in the last few, the last year, outside of the last year, I would say that would be a record bought position for us in the hog industry.
• 12:18
  SPEAKER_00: Um, that is definitely a concern, especially as I see some of these front month hog futures carrying a pretty sizable premium relative to what we're getting paid today, because those do have to come together.
• 12:31
  SPEAKER_00: April lean hog futures will settle to the CME index, which is the average paid price in the hog industry, and it's gonna do it in six weeks.
• 12:41
  SPEAKER_00: So some of these things have to start getting moving.
• 12:44
  SPEAKER_00: Either the cutout has to start going up more than the$3 that we've already seen in the last two months.
• 12:50
  SPEAKER_00: We're gonna have to see some bigger improvements here in the short term, or you could start to see managed money uh backing away a little bit from this complex.
• 12:59
  SPEAKER_00: Every time they've had a big bop position like this in the last year, we have experienced a pretty significant sell-off at some point, cut causing all of us to maybe question how good things are.
• 13:10
  SPEAKER_00: Um, but I'd I'd be concerned about that.
• 13:13
  SPEAKER_00: I'd say over the next 60 days, um, that that'll either play out or not.
• 13:20
  SPEAKER_00: Either the cutout's gonna start going up or or you have to worry about managed money starting to sell off a bit.
• 13:26
  SPEAKER_02: We'll be entering a very key time of the year, that's for sure, for both uh cutout supply side and just for overall uh market moving news and especially some of these other commodities and managed money positions.
• 13:38
  SPEAKER_02: So, any final thoughts for our listeners here this week on the Hog Market Talk podcast?
• 13:43
  SPEAKER_00: Uh nope, I'm good.
• 13:44
  SPEAKER_00: Thank you.
• 13:45
  SPEAKER_02: All right.
• 13:46
  SPEAKER_02: Sounds good.
• 13:46
  SPEAKER_02: Thank you for joining us this week, Mike.
• 13:48
  SPEAKER_02: I appreciate the time and we'll catch you next time.
• 13:50
  SPEAKER_00: Sounds good.
• 13:51
  SPEAKER_00: Thanks for having me.