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Hog Talk: Trump Promises · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Hog Market Talk Podcast with Professional Ag Marketing.
• 0:05
  SPEAKER_00: Come here to get fresh updates on what's happening week to week within the Lean Hog Complex.
• 0:10
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:16
  SPEAKER_00: And remember to visit swineweb.com, an excellent resource for information in the pork industry, where you can also find this podcast.
• 0:25
  SPEAKER_00: This is your host, Mike Miner.
• 0:26
  SPEAKER_00: Let's crush.
• 0:27
  SPEAKER_00: Today is July 9th.
• 0:28
  SPEAKER_00: I've got Luke Wells back with us here.
• 0:30
  SPEAKER_00: It's been a few weeks.
• 0:31
  SPEAKER_00: How you doing, Luke?
• 0:32
  SPEAKER_00: I'm good, buddy.
• 0:33
  SPEAKER_00: How are you doing today?
• 0:34
  SPEAKER_00: We're doing really good, really good.
• 0:36
  SPEAKER_00: I'm going to talk a little bit about the grain market here to start off with.
• 0:39
  SPEAKER_00: We've had a lot of action there, especially relevant to anyone uh putting it into a big today from the input perspective.
• 0:45
  SPEAKER_00: So we're gonna talk about that a little bit, talk about Trump and trade, and then we're gonna wrap up just talking about some broad fundamentals across that hog market, Luke.
• 0:53
  SPEAKER_02: Yeah, it sounds like a good topic, man.
• 0:55
  SPEAKER_00: Alright.
• 0:56
  SPEAKER_02: What a what a what a kind of little roller coaster with Donald Trump here recently, huh?
• 1:00
  SPEAKER_00: Well, it really sums it up well.
• 1:01
  SPEAKER_00: If you look back at what we've been trading up until the end middle of last week, remember we didn't have Friday's trade, so we had Friday off, but on Wednesday and Thursday, up until that point, the grain markets were trading weather, and the weather's been fantastic, Luca.
• 1:18
  SPEAKER_00: There's no problems in the corn belt basically anywhere at this current point.
• 1:22
  SPEAKER_02: Like, do we even need rain till like August 1st?
• 1:25
  SPEAKER_00: Some folks would believe that you probably don't here, but nonetheless, the forecast going forward looks pretty decent for the rest of July.
• 1:33
  SPEAKER_00: And for corn, that basically makes your crop.
• 1:36
  SPEAKER_00: So as long as some of that weather comes to fruition, we should be sitting, okay, Luke, on the corn side.
• 1:41
  SPEAKER_00: No.
• 1:42
  SPEAKER_00: At this point, they had been trading weather, and that shouldn't be a new thing.
• 1:46
  SPEAKER_00: We've been selling off, weather's been fantastic.
• 1:48
  SPEAKER_00: Most corn, even locally, is pol or is uh tasseling about to pollinate probably a week from here, and it looks like fine weather.
• 1:55
  SPEAKER_00: So the corn market's been putting in new lows.
• 1:58
  SPEAKER_00: Today on D's corn we put in new lows on the contract at 411.
• 2:02
  SPEAKER_00: So we've been at some really low levels, been selling off.
• 2:04
  SPEAKER_00: It seems like no floor really has been found.
• 2:08
  SPEAKER_00: Now, if you go and you start looking at uh, for example, the uh Trump rally that happened Thursday night, and we were supposed to get a China trade announcement in that speech was the rumor.
• 2:22
  SPEAKER_02: Now a lot of anticipation there, right?
• 2:25
  SPEAKER_00: Well, they rallied the market for two straight days on corn in an immense fashion.
• 2:30
  SPEAKER_00: Well, that was a bull.
• 2:31
  SPEAKER_02: I got a little story to tell on that.
• 2:33
  SPEAKER_02: So we were we were heading my family in Iowa, it's about a four-hour drive.
• 2:37
  SPEAKER_02: We're heading to that.
• 2:38
  SPEAKER_02: So we my son and I, my son's 20, he's starting to kind of get interested.
• 2:41
  SPEAKER_02: And I said, Hey, the market's really looking for some something on China and trade.
• 2:45
  SPEAKER_02: And so we we put it on YouTube, we watched it on the way down.
• 2:48
  SPEAKER_02: I said, Brady, that's his name.
• 2:49
  SPEAKER_02: Let's look for Trump to say something about China, right?
• 2:52
  SPEAKER_02: And we he went about what an hour and a half or so.
• 2:54
  SPEAKER_02: I mean, he it was a rally, man, and big, beautiful bill, and he had some things to celebrate, right?
• 2:58
  SPEAKER_02: But it got done, and my son says, Dad, I didn't hear anything about China and trade.
• 3:03
  SPEAKER_02: Did I miss it?
• 3:04
  SPEAKER_02: And I said, No, son, you did not.
• 3:07
  SPEAKER_00: I put that immediately on our team chat right after I'm like, Did he even say China once in that entire rally?
• 3:14
  SPEAKER_00: And I knew I texted some other people.
• 3:16
  SPEAKER_00: I'm like, it's not gonna be pretty on Sunday night for these crazy.
• 3:19
  SPEAKER_02: I was uh we were out, you got a back home from our C and family, and I was on the back deck, and I just opened up the markets at 6.50.
• 3:25
  SPEAKER_02: Just like it was like a tire a little bit losing air.
• 3:27
  SPEAKER_00: It just it was rough, and uh so we immediately took that out.
• 3:32
  SPEAKER_00: Those two days we immediately took out all that premium we put back in, and now we're making new lows again because weather, yep, still looks fantastic.
• 3:40
  SPEAKER_00: Now it's becoming this game of how big of a crop can you say, Luke, how big of a crop can I say, and then it's like a competition.
• 3:47
  SPEAKER_02: That's that's what it's turned to.
• 3:48
  SPEAKER_02: I mean, it was can we put a 181 in the bin like a couple of weeks ago?
• 3:52
  SPEAKER_02: And then now it's I mean, I've heard some I mean, kind of some numbers I don't even want to repeat on this podcast.
• 3:56
  SPEAKER_00: So I mean a lot of 184 to 188, because that would be two to four percent above trend line yields.
• 4:02
  SPEAKER_00: So those are reasonable, but there are 190s getting thrown.
• 4:06
  SPEAKER_00: I mean it's a number thrown.
• 4:07
  SPEAKER_00: Yeah, yeah.
• 4:08
  SPEAKER_00: So we'll see what this ends up being.
• 4:10
  SPEAKER_00: Nonetheless, for the hog producers in the room, that is not a problem.
• 4:14
  SPEAKER_00: That's a good guy.
• 4:15
  SPEAKER_00: It's a real good guy.
• 4:16
  SPEAKER_00: Meal, you continue to sell off.
• 4:18
  SPEAKER_00: That's seeing some nice uh depreciation as well there.
• 4:22
  SPEAKER_00: Uh all of this seems to be helping on the input side, at least, Luke, up until this point.
• 4:26
  SPEAKER_02: All at the same time, too.
• 4:28
  SPEAKER_02: I mean, forward meal crush is good.
• 4:30
  SPEAKER_02: I mean, and you know, look on the demand side, right?
• 4:32
  SPEAKER_02: I mean, ethanol export, I mean, the the the the the corn balance sheet now is going to need demand side help.
• 4:37
  SPEAKER_02: And I think it can get some, right?
• 4:38
  SPEAKER_02: Let's not forget that.
• 4:39
  SPEAKER_02: But you know, just just a lot of meal, a lot of I mean, new expansion coming on again in crush.
• 4:44
  SPEAKER_02: And we're seeing some some some some really attractive kind of best ever forward meal basis operas, too.
• 4:50
  SPEAKER_02: So you you you put that across contract kind of lows on the board.
• 4:54
  SPEAKER_02: It's just we're shaping up to we can have some pretty competitive cost of gains, Mike.
• 4:57
  SPEAKER_00: We started to see that at this time last year, too.
• 4:59
  SPEAKER_00: Remember, demand really turned on about August time frame when we were getting below four bucks on Dece Corn, and that helped uh get us a little rally into the fall.
• 5:08
  SPEAKER_00: So we'll see how much demand turns on here on these inputs, anyways, for the hogs.
• 5:13
  SPEAKER_00: But what can you tell me about the hog fundamental?
• 5:15
  SPEAKER_02: So I'm gonna stick on the whole Donald Trump thing, right?
• 5:17
  SPEAKER_02: So I mean we kind of we had, you know, he got the whole his global oil play.
• 5:21
  SPEAKER_02: Uh I mean, Iran, Israel, and and all this, and then and then you know, this this Des Moines rally, it was it was really about campaign promises he made.
• 5:29
  SPEAKER_02: It was it was about celebrating big, beautiful bill and other things, right?
• 5:33
  SPEAKER_02: But you know, we had this July 9th date, which is today, I think, right?
• 5:37
  SPEAKER_02: Today, yeah, which was a big deal up until about yesterday when he kicked the canned dogs first, right?
• 5:42
  SPEAKER_02: And I think, you know, so market side jesting all that, but some countries are getting some increased tariffs, right?
• 5:48
  SPEAKER_02: And and specifically Japan at 25%, Korea at 25%, South Korea, that is, and the hawk market really hasn't cared about that yet, mainly because we haven't retaliated, but again, and and I think I don't want to say the market's in like Trump tariff fatigue, because that's a dangerous position to get into.
• 6:09
  SPEAKER_02: But uh, you know, that that's not a that's not a good thing for us.
• 6:13
  SPEAKER_02: If we look at our total export percent of production, Mexico continues to be our biggest deal.
• 6:18
  SPEAKER_02: Ten percent of our port goes to Mexico, right?
• 6:21
  SPEAKER_02: But Japan's four percent, South Korea's three percent.
• 6:24
  SPEAKER_00: These are so that would be what two and like number five on our export yesterday.
• 6:28
  SPEAKER_02: They're they're they're big deals, right?
• 6:30
  SPEAKER_02: They're big deals, right?
• 6:31
  SPEAKER_02: So we still kind of have that kind of trending with us, and then you switch back to fundamentals, right?
• 6:36
  SPEAKER_02: So maybe a little kick to can down the road, but doesn't feel good.
• 6:40
  SPEAKER_02: I mean, it's it's always a look in the rearview mirror, but we had you know May exports come out earlier this week, 3.4% lower than a year ago.
• 6:48
  SPEAKER_02: I mean, just it's hard to get real friendly export growth, right?
• 6:51
  SPEAKER_02: In this environment.
• 6:52
  SPEAKER_02: Beef prices still high, the pork to beef things, it's finally mattering.
• 6:57
  SPEAKER_02: I saw over the 4th of July weekend, I saw Hardy's running nationwide ads on pulled pork sandwiches.
• 7:03
  SPEAKER_02: Like those are the kind of things we need to see, right?
• 7:06
  SPEAKER_02: So all that's good.
• 7:07
  SPEAKER_02: But again, cutout, it is not uncommon for cutout to get a little soft seasonally through the fourth, right?
• 7:13
  SPEAKER_02: But we just went through, you know, 4th of July, it was our lowest kill of the year.
• 7:18
  SPEAKER_02: The lowest kill we'll see.
• 7:19
  SPEAKER_02: This week's kills getting a little bit trimmed a little bit as well.
• 7:23
  SPEAKER_00: I mean, we kind of need cutout to rally, and normally we do until the end of three years.
• 7:29
  SPEAKER_02: Normally because we get lower production through the fourth, right?
• 7:32
  SPEAKER_02: And come out, but we're gonna get, you know, so that's kind of, I think to me, the cutout has been the biggest thing I've been watching this week, Mike.
• 7:38
  SPEAKER_02: It's it's kind of bounced around 110, 113.
• 7:40
  SPEAKER_02: It's just it's it's not doing much yet.
• 7:43
  SPEAKER_02: Cash hog trade.
• 7:45
  SPEAKER_02: I mean, we did get 115s paid this week, matches the year high, but it was a tough 115.
• 7:50
  SPEAKER_02: It wasn't easy to get, you know, 115.
• 7:53
  SPEAKER_02: Um, you know, the the the futures market was showing a little bit of optimism.
• 7:57
  SPEAKER_02: We do have Goldman Roll started yesterday, so we're getting a little reallocation to manage money using a big long, right?
• 8:03
  SPEAKER_02: The weaned pig market kind of, you know, the hog and pig report told us what a week ago or whenever when it came out, more hogs were a year ago.
• 8:10
  SPEAKER_02: Market kind of had trouble with that, but dece was at 87.
• 8:14
  SPEAKER_02: Last year, dece went off at 84.
• 8:17
  SPEAKER_02: Market said, why do we need to be above 84 if we have more pigs?
• 8:20
  SPEAKER_02: Went right back to 84.
• 8:21
  SPEAKER_02: Wean pig market this week, higher top, higher weighted average, counter-seasonal move.
• 8:26
  SPEAKER_02: We're putting some value back into Ach and Dees.
• 8:29
  SPEAKER_02: I mean, just there's a lot of moving balls around, Mike.
• 8:32
  SPEAKER_02: It's gonna be really interesting how this summer plays out.
• 8:34
  SPEAKER_02: But what we we do know and continue to talk about forward margins, very good.
• 8:40
  SPEAKER_02: Cost of production, we're getting some spots we can lock in some really competitive cost of production.
• 8:44
  SPEAKER_02: So, you know, let's let's not get wrapped up in all this.
• 8:47
  SPEAKER_02: Let's just continue to manage risk in our business.
• 8:50
  SPEAKER_02: But this next couple weeks, it's you know, it's gonna be kind of a big deal.
• 8:53
  SPEAKER_02: We're gonna see the bellies, they're set, cold storage is good, they should get some appreciation.
• 8:58
  SPEAKER_02: Hams, hams usually rally this time of year, but they already kind of rallied.
• 9:02
  SPEAKER_02: So can they double top?
• 9:03
  SPEAKER_02: We'll see.
• 9:04
  SPEAKER_02: Um, we'll just keep our kind of our foot uh foot to the pedal and our eyes on the game, right?
• 9:10
  SPEAKER_02: And just big picture, keep keep managing margins.
• 9:13
  SPEAKER_02: We're in a good scenario.
• 9:14
  SPEAKER_02: And don't forget about this, all this volatility.
• 9:17
  SPEAKER_02: This trade thing is still a big deal.
• 9:20
  SPEAKER_02: Let's not lose sight of that.
• 9:22
  SPEAKER_02: So, Mike, if we can switch gear, I know we're about out of time.
• 9:25
  SPEAKER_02: Next week is the National Pork Industry Conference.
• 9:28
  SPEAKER_02: It's in Wisconsin Dales.
• 9:30
  SPEAKER_02: We're a sponsor of it.
• 9:31
  SPEAKER_02: We're actually we we speak at the conference, have a breakout session talking about risk.
• 9:36
  SPEAKER_02: But it's it's a if if if people, anybody that you know it's about a thousand pork producers that go, Mike, it's a big deal.
• 9:42
  SPEAKER_02: Again, it's in the Wisconsin Dells and in Wisconsin.
• 9:45
  SPEAKER_02: And so we'll see a lot of our listeners, a lot of our customers, a lot of our allied industry friends out there.
• 9:50
  SPEAKER_02: We're looking forward to interacting with you.
• 9:53
  SPEAKER_02: Um, Tuesday afternoon, it's kind of a social deal.
• 9:56
  SPEAKER_02: We'll have a poolside commandna amongst many other sponsors where we can interact with friends.
• 10:01
  SPEAKER_02: But anybody, if you're not going to NPIC, it's not too late to register.
• 10:05
  SPEAKER_02: Great conference.
• 10:06
  SPEAKER_02: And for those that are coming out there, stop by and see us in our breakout session Monday afternoon.
• 10:10
  SPEAKER_02: Come see us Tuesday afternoon at our social event, and we'll look forward to interacting with you throughout the conference for the few days that's going on, Mike.
• 10:18
  SPEAKER_00: All right.
• 10:19
  SPEAKER_00: Thank you for your time today, Luke.
• 10:20
  SPEAKER_02: Take care, Mike.
• 10:22
  SPEAKER_00: And thank you to all our listeners.
• 10:24
  SPEAKER_00: Please reach out to us at professional eggmarketing.com.
• 10:27
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing.
• 10:30
  SPEAKER_00: That's released every Friday.
• 10:32
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 10:38
  SPEAKER_00: See you next time.