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Hogs are green ahead of NPIC · 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.
• 0:21
  SPEAKER_00: All right.
• 0:22
  SPEAKER_00: Today is July 8th.
• 0:23
  SPEAKER_00: I've got Luke Wells with us here today.
• 0:25
  SPEAKER_00: How's it going, Luke?
• 0:26
  SPEAKER_02: You know what, Mike?
• 0:27
  SPEAKER_02: We uh we have a lot of green on the hog board today.
• 0:30
  SPEAKER_02: 387 higher in the awk, to name one specifically.
• 0:34
  SPEAKER_02: It's a pretty good day, Mike.
• 0:35
  SPEAKER_02: Pretty good day.
• 0:36
  SPEAKER_00: It is a good day to be in the hog market.
• 0:38
  SPEAKER_00: We've been awaiting a move like this, which is the first time in basically since May 13th.
• 0:46
  SPEAKER_00: I could count a move basically more than a buck and a half or so higher in a single day on the hog market.
• 0:52
  SPEAKER_02: So let's take a look at the October chart, or maybe we will later it just, I mean, this hog market's been kind of waiting for a day like this.
• 0:58
  SPEAKER_02: So let's we need some follow-through that can come.
• 1:01
  SPEAKER_02: We'll get into that later.
• 1:02
  SPEAKER_02: But yeah, good day in the hogs for sure.
• 1:04
  SPEAKER_00: A few other good days and some of these other egg commodities.
• 1:08
  SPEAKER_00: Uh, I just want to talk about some of the other big movers and shakers, mainly on the input side for the hog market, one of them being corn and soybeans.
• 1:16
  SPEAKER_00: Uh, let's start there, Luke.
• 1:17
  SPEAKER_00: If you look at the uh Chinese activity here, they're back buying American soybeans.
• 1:22
  SPEAKER_00: So that's been really leading the charge higher here.
• 1:25
  SPEAKER_00: Soybeans have put on a dramatically large amount of uh money here in the last three trading sessions.
• 1:32
  SPEAKER_00: If you look uh just three sessions ago, we put on 44 cents in November in a single day.
• 1:37
  SPEAKER_00: And uh, big part of that being that they've just since February they've started buying U.S.
• 1:42
  SPEAKER_00: soybeans again for the first time here in the last couple weeks and very small amounts, but if they are gonna get anywhere near their 25 million metric ton gold, they've started on purchasing that.
• 1:52
  SPEAKER_00: So not huge purchases, but you see their name popping up more and more.
• 1:56
  SPEAKER_00: And now supposedly they're gonna try to uh buy a good, good amount by the time G gets here in September.
• 2:03
  SPEAKER_00: So that's kind of what's helped the soybean market specifically.
• 2:06
  SPEAKER_00: We obviously have some weather premium that's still in that market as well, especially when we look at the weather side.
• 2:11
  SPEAKER_00: Weather is gonna be very hot over the next week or so.
• 2:15
  SPEAKER_00: A lot of key areas are getting rain, though, so we'll see how those two kind of mix and mash with each other.
• 2:20
  SPEAKER_00: But the heat has started a little bit of this ramp up in grain prices as well.
• 2:25
  SPEAKER_00: And then kind of the third leg of the stool here for the grain market, which would be my big three, China, uh, Iran, and uh, and weather would be Iran.
• 2:34
  SPEAKER_00: And when I look at that, it looks like as of just an hour ago, the Iran wars back on after the Tehran attacks in the Hormuz, uh, that really triggered a response from Trump to just basically say, ceasefire's over.
• 2:47
  SPEAKER_00: We're back to war.
• 2:49
  SPEAKER_00: So uh oil market up five or so dollars today, really big move there for the first time in quite some time as premiums have been exiting that market, but in general, money flow has been flowing back into the ag world Luke.
• 3:01
  SPEAKER_02: For sure.
• 3:03
  SPEAKER_00: What can you tell me about the uh hog market here?
• 3:07
  SPEAKER_00: Because the grains aren't the only one that's been fired up lately.
• 3:10
  SPEAKER_00: Hogs here having a pretty good run, as we talked about.
• 3:12
  SPEAKER_00: Can you walk me through some of the basic reasons why we're rallying here today?
• 3:17
  SPEAKER_02: Absolutely, and I want to take maybe a step back and up, just like so.
• 3:20
  SPEAKER_02: Let's take perspective for your 2026, okay?
• 3:23
  SPEAKER_02: Um Q1 uh of 26 cutout performed very well.
• 3:27
  SPEAKER_02: That's when we had our summer, you know, futures markets above 110.
• 3:31
  SPEAKER_02: We had a lot of optimum in this thing, right?
• 3:33
  SPEAKER_02: Um, but you know, you see you ended with the Iran war, and that's where I wanted to kind of come back to it.
• 3:37
  SPEAKER_02: You know, Q2, uh uh we had we had the Iran war start, and we had a lot of inflation driven largely and fuel prices, gas at the pump, right?
• 3:47
  SPEAKER_02: We had a little bit of a pinch consumer, and really Q2 is like a tale of two stories.
• 3:52
  SPEAKER_02: Porks performed very poorly since then.
• 3:55
  SPEAKER_02: You mentioned we haven't had a day like this since what do you say, May or whatever the number was, the date was, right?
• 4:00
  SPEAKER_02: And so so it's it's we've struggled, right?
• 4:03
  SPEAKER_02: Um, there's some things that you you know you we you we didn't see uh that came in, and I'd really think uh a little bit more pinch consumer, and as the the the dollar spend for proteins, which is still good, protein is still in high demand, right?
• 4:18
  SPEAKER_02: But pork didn't fare as well through that, you know.
• 4:20
  SPEAKER_02: Plus, you know, you mentioned hot weather, dry weather, maybe not dry, but hot weather coming in.
• 4:25
  SPEAKER_02: We've had a pretty cool Q2 as well.
• 4:27
  SPEAKER_02: Our pigs have grown really, really well.
• 4:30
  SPEAKER_02: Um, and and it's been purposeful.
• 4:32
  SPEAKER_02: Uh corn is relatively cheap, our cost of productions are competitive, and revenue is still relatively good.
• 4:39
  SPEAKER_02: And so we've made them big and we were continuing to make them big.
• 4:43
  SPEAKER_02: Plus, Mother Nature played along.
• 4:44
  SPEAKER_02: We've had really good growth.
• 4:46
  SPEAKER_02: It's not been that hot.
• 4:47
  SPEAKER_02: Pigs have grown.
• 4:47
  SPEAKER_02: So the past eight weeks, so two months, you kind of get back to this Q2 type comparison, right?
• 4:53
  SPEAKER_02: Um, like 3%, 2.8 is the actual number, more pork on the market versus a year ago.
• 4:58
  SPEAKER_02: That's a number, man, right?
• 5:00
  SPEAKER_02: So you take a little more pinch consumer.
• 5:02
  SPEAKER_02: The market was looking for a few less pigs.
• 5:04
  SPEAKER_02: It didn't get that, it got about the same amount of pigs, but because they're heavier, three percent more pork, right?
• 5:09
  SPEAKER_02: And it's been we've it's been a little bit of a struggle bus, right?
• 5:13
  SPEAKER_02: Now take a step in and out, like I said before.
• 5:16
  SPEAKER_02: Um, we've also seen in the cattle market, it's you know, there's more supply coming at the U.S.
• 5:21
  SPEAKER_02: consumer, uh, production's up a little, imports are definitely up a little, and this whole just consensual consumer.
• 5:27
  SPEAKER_02: I mean, 400 kind of held us, and we've drifted.
• 5:29
  SPEAKER_02: We're not we're not at 400 anymore, right?
• 5:31
  SPEAKER_02: And the seasonals down from here on beef.
• 5:34
  SPEAKER_02: And the seasonal's down for beef.
• 5:35
  SPEAKER_02: And my point, though, with that is pork still like demand overall.
• 5:39
  SPEAKER_02: We look at the human diet, GLP, you know, high protein, like protein's still in a really good spot.
• 5:45
  SPEAKER_02: Um, 3% more pork, and yeah, we didn't have the 120 cut out that the market looked for, but we've stayed in the mid to upper 90s, right?
• 5:52
  SPEAKER_02: As we kind of turn the quarter, though, like 4th of July, everything that I've been able to gather, talking to Mitri, talking to retailers, like like meat, meat clearance was good over the fourth.
• 6:02
  SPEAKER_02: Um, beef actually exceeded expectation.
• 6:04
  SPEAKER_02: People are still eating a lot of beef, but pork was called the workhorse of the protein market.
• 6:09
  SPEAKER_02: A lot of featuring on pork, a lot of pork beef combos.
• 6:12
  SPEAKER_02: Like pork, pork performed very well over the I did my part.
• 6:16
  SPEAKER_02: I did pork burgers and it was awesome.
• 6:18
  SPEAKER_02: We had pork butts, we had pork ribs, we actually ate a few hot dogs, if I will, too.
• 6:22
  SPEAKER_02: Pork hot dogs, mind you, right?
• 6:23
  SPEAKER_02: Yes, but we had good, and my whole is as we kind of looked forward here, just it it pork didn't rally, you know.
• 6:29
  SPEAKER_02: We've done a lot of 24 versus 26 comparisons.
• 6:32
  SPEAKER_02: I mean, in 2024, we actually hit our cutout summer high like end of July, and then we almost hit it back in you know in November, right?
• 6:39
  SPEAKER_02: Is this this beef to pork ratio, this four to one spreads?
• 6:43
  SPEAKER_02: You know, there's always the the saying too, like Memorial Day, it's T-bones and ribides, and Labor Day, it's it's hot dogs, right?
• 6:50
  SPEAKER_02: People go on their vacations, they spend.
• 6:52
  SPEAKER_02: Now we have we'll see what that does on fuel prices.
• 6:55
  SPEAKER_02: Have been easing.
• 6:56
  SPEAKER_02: We've got more escalation here, right?
• 6:58
  SPEAKER_02: But pork, it pork is going and can and will find its value proposition uh in the meat complex, right?
• 7:05
  SPEAKER_02: And I think we're seeing that, right?
• 7:07
  SPEAKER_02: Um uh also, you know, up front, like you know, hog and pig report told us even, you know, didn't tell supply was burdensome, right?
• 7:15
  SPEAKER_02: And the market actually, like July and August, like today.
• 7:18
  SPEAKER_02: I mean, August closed at 99.65.
• 7:20
  SPEAKER_02: The index is 92 bucks, Mike.
• 7:22
  SPEAKER_02: I mean, that's a staunch premium this thing.
• 7:24
  SPEAKER_02: The market's anticipating some good movement here, and it does feel like it's coming.
• 7:29
  SPEAKER_02: Cash hog trade this week was was good.
• 7:32
  SPEAKER_02: Um, 99 sprinted today.
• 7:34
  SPEAKER_02: We've been stuck at 98 just for for weeks and weeks, probably a month, right?
• 7:38
  SPEAKER_02: Um, and a couple extra packers entered the market, so cash hogs feel a little better.
• 7:42
  SPEAKER_02: Um, you know, cash loads that you mentioned hot.
• 7:45
  SPEAKER_02: You know, I wouldn't say there's an imbalance, a real big shortage or real big overlage of negotiated hogs, but like, you know, this week I had a few loads pulled away because I just didn't quite have the weight.
• 7:54
  SPEAKER_02: Supposed to have that.
• 7:55
  SPEAKER_02: It's supposed to be hot in July, but that all kind of matters.
• 7:58
  SPEAKER_02: And then meat tone trade.
• 7:59
  SPEAKER_02: It's just it's it's got a general, you know, last past two weeks.
• 8:02
  SPEAKER_02: You can't expect a lot the week of the fourth last week, because that that that those sales have been made.
• 8:07
  SPEAKER_02: I mentioned good demand over the fourth, just a little stronger tone to meet.
• 8:11
  SPEAKER_02: The two primals that we really need to carry us, historically carry us post-fourth is hams and bellies, especially the belly and and and also the ham.
• 8:20
  SPEAKER_02: They've got room to run, right?
• 8:22
  SPEAKER_02: So we we were we're seeing some good things happening.
• 8:25
  SPEAKER_02: We got a lot of uh actually optimism relative to spot fundamentals in the August, but it's really been those October on out contracts.
• 8:32
  SPEAKER_02: They've been the ones that have overperformed, underperformed, they're carrying discounts, not premiums, right?
• 8:38
  SPEAKER_02: And uh coming back to pork, I think we can find value, I think we can do promotions.
• 8:43
  SPEAKER_02: I I or pork didn't go up as high as we had hoped this summer.
• 8:48
  SPEAKER_02: I don't think it has to seasonally drop as well, and we're starting to see the futures market see that.
• 8:52
  SPEAKER_02: So, really good day today, really nice to see this kind of into the hog market.
• 8:56
  SPEAKER_02: Now we need to continue to see the follow-through, but things are feeling feeling much better.
• 9:01
  SPEAKER_02: And I well I'm excited what we can kind of do with this market over the next few months to weeks and and into the rest of the year.
• 9:06
  SPEAKER_02: I think pork demand's got some really good, really good opportunity in it, especially from today's like October to December futures values, Mike.
• 9:14
  SPEAKER_00: Well, I always like to say the market isn't trading what happened yesterday, it's trading the next piece of data, and this market feels a lot different, just happiness-wise, versus what it even was two days ago.
• 9:27
  SPEAKER_00: Absolutely.
• 9:28
  SPEAKER_00: So a lot can change in a in a very big hurry.
• 9:30
  SPEAKER_00: So I I think that's always important to keep uh remembering here in this market.
• 9:34
  SPEAKER_00: Any other final thoughts here before we wrap up the five?
• 9:37
  SPEAKER_02: No, I think that's good.
• 9:38
  SPEAKER_02: Uh, the only final thought I'd uh I'd offer just changing gears a little bit.
• 9:42
  SPEAKER_02: So next week starts Sunday night, this coming Sunday, uh National Pork Industry Conference, NPIC, uh, one of the largest, if not the largest, conference, uh uh outside of rural pork and whatnot, right?
• 9:53
  SPEAKER_02: In the in the swine industry.
• 9:54
  SPEAKER_02: Uh it's at the Wisconsin Dells, uh Calihori Resort.
• 9:58
  SPEAKER_02: I think there'll be over a thousand registered attendees, Mike.
• 10:02
  SPEAKER_02: Um great, great event.
• 10:04
  SPEAKER_02: Uh we're a breakout speaker in the afternoon sessions on Monday.
• 10:08
  SPEAKER_02: Uh will be our spot.
• 10:10
  SPEAKER_02: Uh Tuesday uh afternoon is kind of a social part of the conference.
• 10:13
  SPEAKER_02: We'll have a poolside cabana, some drinks and food and whatnot, right?
• 10:17
  SPEAKER_02: So uh we'll have a lot of a lot of industry allies, a lot of customers, a lot of friends at this.
• 10:21
  SPEAKER_02: Uh, if you get to National Pork Industry Conference, it's not too late if you want to go get in your truck or get in the plane, right?
• 10:27
  SPEAKER_02: Um, but come see us, love to see you there.
• 10:29
  SPEAKER_02: And uh yeah, hopefully we can continue to build on this momentum that we've we kind of got kicking up this week, Mike.
• 10:34
  SPEAKER_00: And to celebrate, we have these cool beach bags that we're giving away uh to anyone that stops by, and it's to help celebrate the 250 year anniversary.
• 10:45
  SPEAKER_00: So it's gonna be really cool.
• 10:46
  SPEAKER_00: Please stop buying it.
• 10:47
  SPEAKER_02: 250 year celebration, yeah.
• 10:49
  SPEAKER_02: And ProAg, it's just we're we're we're we're privately owned, we're American owned, we operate locally.
• 10:54
  SPEAKER_02: It just yeah, we're pretty excited about 250 and all that too.
• 10:57
  SPEAKER_02: So yeah, the bags help kick that off, right?
• 10:58
  SPEAKER_00: That we are all right.
• 10:59
  SPEAKER_00: Please click the link in the description below to get a hold of our daily market commentary and other cool marketing info.
• 11:05
  SPEAKER_00: Uh, please go to our website, professionalagmarketing.com, and please reach out if you want help marketing, have questions, anything like that.
• 11:12
  SPEAKER_00: Please give us a shout.
• 11:13
  SPEAKER_00: Thanks, Luke.
• 11:14
  SPEAKER_02: Thanks, Mike.