Latest / Professional Ag Marketing Podcast / Business As Usual in the Hog Market | Hog Market Talk March 25th, 2026

Transcript

Business As Usual in the Hog Market | Hog Market Talk March 25th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Hog Market Talk Podcast.
• 0:06
  SPEAKER_00: Your weekly deep dive into hog market fundamentals, breaking news and industry inside.
• 0:13
  SPEAKER_00: Trading commodity futures and options involve substantial risk of luck and is not suitable for all investors.
• 0:21
  SPEAKER_01: Alright, this is Mike Minor.
• 0:23
  SPEAKER_01: I've got Pat here with us today.
• 0:24
  SPEAKER_01: How's it going?
• 0:25
  SPEAKER_02: Good, Mike.
• 0:26
  SPEAKER_02: How are you this afternoon?
• 0:27
  SPEAKER_01: We're doing really good.
• 0:28
  SPEAKER_01: We're going to talk about the hog market today.
• 0:30
  SPEAKER_01: Hog market closed here this afternoon, Pat, Wednesday today.
• 0:35
  SPEAKER_01: Cattle were down a little bit, but the hog market, pretty boring day for the most part, pretty much unchanged across the board here that put June at 104 and December at about 82 and a half here.
• 0:45
  SPEAKER_01: So what's your take uh to start off with with some of the recent market activity we've seen?
• 0:49
  SPEAKER_02: Yeah, and the nearby contract, that April contract that has uh 14 more days until uh uh expiration, uh down about 15 cents and settled a little bit softer here uh week over week.
• 1:03
  SPEAKER_02: And you know, Mike, we're um, you know, the the theme today's quiet trade, to your point, is perhaps a good precursor to our theme today, which is you know, this hog market is behaving um very normal for this time of year.
• 1:17
  SPEAKER_02: And a month or so ago, um, this market showed a little bit of life.
• 1:21
  SPEAKER_02: April was trading at a premium to the index, at a premium to spot fundamentals, and the deferred uh slots were uh uh you know trading a fairly normal curve beyond that.
• 1:32
  SPEAKER_02: And and so had a little bit of optimism in the market.
• 1:35
  SPEAKER_02: We've lost that over the last four weeks or so as we've largely traded a flat cutout.
• 1:40
  SPEAKER_02: And again, I would just come back to that's kind of normal for this time of year.
• 1:43
  SPEAKER_02: It's not uncommon for us to to try to put a little bit of life into this market uh in the first couple uh months of the year, and then in some years we're able to build off of that and and uh work ourselves a little higher.
• 1:56
  SPEAKER_02: And and but most years uh we tend to stagnate as we work through this March uh April time frame.
• 2:02
  SPEAKER_02: And so, you know, we we got a uh a really a fairly nice basis structure today, which is a a a nice opportunity for for our hedgers and up front here.
• 2:13
  SPEAKER_02: Um and we've also now seen just a little bit of weakness um in in uh uh the pork carcass composite, ham specifically, um a little bit lighter trade going into Mexico, I think, is is putting a little bit of pressure on the ham complex today, but we certainly don't see anything, Mike, that seems to be incredibly alarming there, right?
• 2:33
  SPEAKER_02: And and so, and so I guess again, sort of just back to this theme of of uh you know the the hog market, while at historically elevated levels, which obviously is a good thing, um, it's behaving pretty normally.
• 2:48
  SPEAKER_01: Gotcha.
• 2:48
  SPEAKER_01: Interesting.
• 2:49
  SPEAKER_01: And you would say normally based on uh the market activity too, but yeah, USMCA relations, Mexico-wise, and then just go into like the domestic side, pretty normal.
• 3:00
  SPEAKER_02: Yeah, that's right.
• 3:01
  SPEAKER_02: That's the right question, right?
• 3:02
  SPEAKER_02: Like I because I I mentioned Mexico and softer hams, and that is where one should leap to, right?
• 3:07
  SPEAKER_02: Is is uh all right, are we sure there isn't something else going on there?
• 3:11
  SPEAKER_02: Is there some some concerns as it relates to USMCA negotiations andor anti-trade dumping?
• 3:17
  SPEAKER_02: And I think the answer to all of that is no.
• 3:19
  SPEAKER_02: I think this is just more again, just from a seasonal um uh pause here as it relates.
• 3:25
  SPEAKER_02: Now, one of the things that uh another thing that we wanted to talk just a little bit about that that uh you know has started to catch outside market attention, um, we've seen and been watching uh Chinese pork prices for a while here um continuing to erode, and relatively expensive corn delivered into China has created a challenging systemic margin structure for the Chinese pork producer.
• 3:51
  SPEAKER_02: And and uh, you know, as you mentioned a couple days ago, uh Mike, this is starting to get the the news, you know, Goldman Sachs, Bloomberg, others are are starting to talk about that a little bit too.
• 4:01
  SPEAKER_02: And so um probably need to be a little bit careful about that.
• 4:05
  SPEAKER_02: I I you know every once in a while um it's one thing for us to you know be dialed in and and have what we believe to be a a good solid uh uh understanding and uh of of what's going on fundamentally in this market, but every once in a while you could potentially get yourself into a little bit of trouble because money flow is thinking differently.
• 4:28
  SPEAKER_02: And so that's a risk.
• 4:29
  SPEAKER_02: That's a risk at some point that a pretty quiet link that's been built in the uh um from the funds perspective, there might be some reasons here for them to be a little less interested, not the least of which is is uh some concerns about China and then also what might happen to Mexico.
• 4:46
  SPEAKER_01: How much do they care about China prices being at 15 year lows and and now they're losing a lot of money uh as of real recent after some of the conflict activity with inputs going where they are?
• 4:56
  SPEAKER_01: Like, how big of a deal is China's hog market to our fund money flow buying U.S.
• 5:01
  SPEAKER_01: hog futures, you think?
• 5:03
  SPEAKER_02: It it's um we have not exported muscle cuts into China for a while now.
• 5:08
  SPEAKER_02: So so fundamentally, internal fundamentals, um, other than the the obvious advantage of variety meats, you know, that you have comp you know, cuts that are are less popular here in the U.S.
• 5:21
  SPEAKER_02: That is a very good idea.
• 5:22
  SPEAKER_02: The stuff I probably don't give my kids at night.
• 5:24
  SPEAKER_02: That's right.
• 5:24
  SPEAKER_02: That that that that is a very, very lucrative, um, nice outlet.
• 5:29
  SPEAKER_02: Lucrative is too strong a word, it's a nice outlet for that product um um you know from the U.S.
• 5:34
  SPEAKER_02: And so we sure hate to lose that market for sure, but it it's it's uh it's it's not uh a significant game changer as it works as it as it relates to, you know, I don't know, world protein s and d or something like that.
• 5:47
  SPEAKER_02: But but again, if outside money wants to sort of focus on something like this, it potentially could be could be a little bit of an issue as we as we go forward here.
• 5:56
  SPEAKER_02: You know, beyond that, Mike, I uh again, I I I think you know, we're in a situation today where where um you know the the forward curve, the margin opportunity and the deferred slots isn't isn't quite as good as what it had been.
• 6:11
  SPEAKER_02: You know, I think that you know just generally we've done a nice job of taking advantage of those opportunities, you know, when they present themselves.
• 6:18
  SPEAKER_02: And so maybe in just a little bit of a pause here and just trying to buy some time as we get closer to spring and summer.
• 6:23
  SPEAKER_01: What are some other talking points that you're working on in this hog market right now that uh you're getting questions on, people are wondering about, and what you think are kind of navigating through it to the important stuff, Pat.
• 6:34
  SPEAKER_02: Well, and I don't, Kate, I didn't ask you to to on this before we started, and I should have.
• 6:39
  SPEAKER_02: If you have access to hog and pig report estimates, it wouldn't be a terrible idea to try to post those now.
• 6:45
  SPEAKER_02: And if not, would just say that we do have an hog and pig report coming out tomorrow afternoon.
• 6:49
  SPEAKER_02: Um, the supply side discussions that that we've had leading up to this hog and pig report is wrapped around, we all know in the middle front of our minds, that with the current margin structure that the pork industry has recently offered, in previous stages of this cycle, we'd likely be experiencing some expansion as it relates to breeding stock in the in the U.S.
• 7:11
  SPEAKER_02: Um, and so we'll keep a watchful eye on that as it relates to this hog and preview report that comes out tomorrow afternoon.
• 7:18
  SPEAKER_02: We don't expect it in this stage of this cycle that we would expect to see much of that, but but that's one thing that we'll keep an eye out for.
• 7:27
  SPEAKER_02: The other um talking point as it relates to the supply side is just what's been going on with health, PERS, PED, um specifically, and and there's really uh no doubt that the the the issues of PED this this this year is worse than what it's been, or maybe the second worst, you know, you know, versus the the 2013-2014 um area.
• 7:48
  SPEAKER_02: And so we'll see.
• 7:51
  SPEAKER_02: But I have a tendency, you know, through the years to not sort of get uh um not not to get too caught up in those supply side discussions, especially particularly as it relates to to the to the issue of PERS and and uh um and so but there's no doubt for the systems and for the for the farms that have been impacted this winter, it's it's been it's been significant.
• 8:14
  SPEAKER_02: And so again, we'll be seeing if there's anything that might show us any indications of that in the Hogan Prug report that comes out um Thursday afternoon.
• 8:21
  SPEAKER_02: And then just one more thing on the supply side, Mike, is I mean, we're I I think 0.9% is the exact number.
• 8:27
  SPEAKER_02: This the first two months of this uh of this calendar year, uh pork production is up about one percent.
• 8:34
  SPEAKER_02: That's weights considered.
• 8:35
  SPEAKER_02: Um, and so and and and and recently about two and a two and a half percent over the last 30 days or so.
• 8:42
  SPEAKER_02: So anyway, we've been seeing um we've been putting plenty of pork on the market here and uh cutouts average a little more than a buck better for the first couple months of this year versus the first couple months of last year.
• 8:53
  SPEAKER_02: And so that's a good thing, right?
• 8:54
  SPEAKER_02: We're we're able to uh kind of print ourselves just a little bit of a of a raise year over year and in spite of a little higher production.
• 9:02
  SPEAKER_01: Interesting.
• 9:02
  SPEAKER_01: So the demand side handling another percent more production year over year, it it's handling it quite.
• 9:07
  SPEAKER_02: Yeah, and that's all I mean, a whole nother discussion about you know record box beef levels and and and being able to elevate pork demand relative to uh um a historically wide relationship between between beef and pork values and and uh you know a whole nother podcast on the potential of all of that, which we're happy to engage in, but a real nice tailwind as it relates to that for sure.
• 9:29
  SPEAKER_01: But a very normal little setback here before those HNP numbers coming tomorrow.
• 9:33
  SPEAKER_02: Yeah, exactly.
• 9:34
  SPEAKER_02: And I I and so I don't, yeah, we are settled back here just a little bit, and I would say that has more to do with uh evening of positions, you know, as we go into that report tomorrow, andor a little bit of month end um quarter end stuff potentially coming up here um and uh buying our time till we get closer to spring and summer.
• 9:51
  SPEAKER_01: For sure.
• 9:51
  SPEAKER_01: And there's been some other significant news coming out today, Pat, just uh along the lines of commodity futures here.
• 9:57
  SPEAKER_01: Uh on the input side, we've had some changes here.
• 10:00
  SPEAKER_01: The big news today was that uh the U.S.
• 10:03
  SPEAKER_01: is going to issue to expand sales of E15 gasoline to ease pump prices here.
• 10:08
  SPEAKER_01: Uh in just the last month, gas prices have moved up now for the average U.S.
• 10:13
  SPEAKER_01: uh regular gasoline price to$398, up almost more than a dollar here from a month ago.
• 10:18
  SPEAKER_01: So uh they're trying to do their best effort to try to ease some prices at the pump, help consumers out a little bit.
• 10:24
  SPEAKER_01: And this is just one of the small steps I think you'll see over the next 10 days or so, it sounds from this administration, whether it be uh trying to get a ceasefire lined up with Iran or trying to just ease some of the inflation concerns.
• 10:36
  SPEAKER_01: You've got midterms coming up, which keep getting talked about as well.
• 10:39
  SPEAKER_01: So uh you're starting to see this uh administration even saw something on Brooke Rollins trying to address fertilizer concerns for those prices and availability too.
• 10:49
  SPEAKER_01: So they're trying to navigate a little bit more carefully around some of these inputs, I think, that impact a lot of people across especially the Midwest heading in terms midterms here.
• 11:00
  SPEAKER_02: Absolutely.
• 11:01
  SPEAKER_02: And we talked, um, we we tried to lay the foundation of this discussion um in our hug podcast last week and our last couple grain podcasts as well.
• 11:10
  SPEAKER_02: And so I I do think it's important that you know all of us as as uh all of our end users need to need to be keenly aware of the developing changes uh in the uh feed, grain, and oil seed complex here, not the least of which is is uh biofuel uh mandates here in the U.S.
• 11:27
  SPEAKER_01: And the next time we talk here, uh next Tuesday, we have a uh quarterly stocks report and prospective plannings.
• 11:34
  SPEAKER_01: Just the next three to ten days, really, even now to next 10 days, you're gonna have a lot of new reports, a lot of headlines.
• 11:41
  SPEAKER_01: This uh grain market specifically is gonna get pushed and pulled a lot of different ways, Pat.
• 11:45
  SPEAKER_02: Yeah, and we're still trading weather out of South America, and we're gonna start trading weather here in the U.S.
• 11:50
  SPEAKER_02: and and uh and and again, as you say, we've got uh a lot of question marks about acreage and and uh and as soon as those numbers come out next Tuesday, they're gonna be questioned because of the changes um uh uh of of market structure since that survey was taken and all of those things.
• 12:06
  SPEAKER_02: Again, just added levels of volatility.
• 12:08
  SPEAKER_02: Um, and and again, as we mentioned last week, creates opportunity.
• 12:11
  SPEAKER_02: And so appreciate uh the opportunity to engage and talk through what makes the most sense for your operation.
• 12:17
  SPEAKER_01: It's been and will be really interesting to watch.
• 12:20
  SPEAKER_01: Like uh this war is almost a month on now, or conflict, I should say.
• 12:23
  SPEAKER_01: It started February 28th.
• 12:25
  SPEAKER_01: But the first two weeks, it's really that was all we traded, I feel like, in a lot of commodities was that conflict.
• 12:30
  SPEAKER_01: And now recently it's having to choose am I trading conflict today or fundamentals, EPA news, and it's having a lot more uh versatility and flexibility, I think, with headlines here as of recently.
• 12:43
  SPEAKER_01: So it'll be interesting to watch the next week.
• 12:45
  SPEAKER_01: But thank you everyone for tuning in today.
• 12:47
  SPEAKER_01: Uh remember to click the link in the description to sign up for our daily market commentary, get fast insights into the ag markets and more.
• 12:54
  SPEAKER_01: Also, check out our website at professional agmarketing.com.
• 12:58
  SPEAKER_02: Thank you, Mike.