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Hog Talk: Friday Jump · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Hog Market Talk Podcast with professional ag marketing.
• 0:05
  SPEAKER_01: Come here to get fresh updates on what's happening week to week within the hog complex.
• 0:10
  SPEAKER_01: Trading commodity features and options involves substantial risk of loss and is not suitable for all investors.
• 0:16
  SPEAKER_01: 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_01: This is your host, Mike Miner.
• 0:26
  SPEAKER_01: Let's go.
• 0:27
  SPEAKER_01: This week I've got Mike Fitzgerald with us from the branch office by Cedar Rabbids.
• 0:31
  SPEAKER_01: How's it going, Mike?
• 0:34
  SPEAKER_01: Good, how are you?
• 0:35
  SPEAKER_01: Fantastic.
• 0:36
  SPEAKER_01: Well, we're going to cover a couple things today.
• 0:38
  SPEAKER_01: I want to talk about the supply side on the hog market, and I want to talk about just seasonals here.
• 0:43
  SPEAKER_01: So let's get started.
• 0:44
  SPEAKER_01: What do you see out of uh the future side first?
• 0:48
  SPEAKER_01: It had a very, very I'll be honest, the hog market's just been boring, Mike.
• 0:52
  SPEAKER_01: It just goes sideways all day, every day.
• 0:54
  SPEAKER_01: Today we actually found some excitement in the hog market, didn't we?
• 0:58
  SPEAKER_01: What did you think about that?
• 1:01
  SPEAKER_00: We did.
• 1:01
  SPEAKER_00: We did.
• 1:02
  SPEAKER_00: So like April, hog futures and out, and farther out uh pretty much made contract life highs today.
• 1:11
  SPEAKER_00: Um a lot of that uh I think was driven by the front months obviously climbing up here.
• 1:18
  SPEAKER_00: Some like October was up a pretty decent chunk, and December and February were all up.
• 1:23
  SPEAKER_00: But April and Out all made contract life highs.
• 1:26
  SPEAKER_00: A lot of that I think is starting to be driven by spot fundamentals.
• 1:31
  SPEAKER_00: Um this is the time of year where our hog supplies would would typically start to go up.
• 1:41
  SPEAKER_00: What our supplies are late today is that inflection they're they're down.
• 1:46
  SPEAKER_00: Um and I looked up just because I was curious, I was looking up what the hog and pig report suggested we were supposed to have from at the end of June.
• 1:55
  SPEAKER_00: So market hog inventory on that hog and pig report there says that we were supposed to have the same amount of pigs as a year ago, maybe a half a percent more.
• 2:08
  SPEAKER_00: And we've been running now for eight consecutive weeks, and the net result over those eight weeks it ends up being 3.4% less pigs year over year for eight consecutive weeks.
• 2:24
  SPEAKER_00: So really starting to surprise the marketplace with tight supplies.
• 2:32
  SPEAKER_00: A lot of this correlates back to six months ago when pig prices were in the eighties and they were really high.
• 2:39
  SPEAKER_00: Yep.
• 2:39
  SPEAKER_00: Maybe, maybe there is actually a hole here, but I gotta believe that with with how carcass weights look to me today and hog slaughter numbers that I'm seeing today.
• 2:49
  SPEAKER_00: I just I just think we have to start warming up to the idea that we have a few less pigs around what the hog and pig report suggests, and that's why you're starting to see some of this optimism back in the futures again.
• 3:00
  SPEAKER_01: Yeah, because supply side obviously seems to have an incredibly high correlation with what actual price environment is.
• 3:08
  SPEAKER_01: And it it's not like demand should be bad.
• 3:10
  SPEAKER_01: I mean, doing what the beef side's doing, that's definitely not hurting us by any means on the pork side, but uh cutouts pretty much stayed flat lately, too, which is always a win at this this time of the year, isn't it?
• 3:23
  SPEAKER_00: That is that's a big win this time of year.
• 3:25
  SPEAKER_00: I think that's that's the biggest question we've all got in the back of our minds today is is this is this going to be a seasonal year?
• 3:32
  SPEAKER_00: The cutout in uh second half of August, first part of September gets wrecked most years.
• 3:40
  SPEAKER_00: Like the higher the summer rally is, the steeper the fall off is as we head into a little bigger supplies.
• 3:48
  SPEAKER_00: When I was running some numbers on that, I feel like last week, and I think the cutout probably drops in the last four years.
• 3:57
  SPEAKER_00: It probably drops about$25.
• 3:59
  SPEAKER_01: August is a rough month for hogs, isn't it?
• 4:02
  SPEAKER_01: Basically everything, to be honest.
• 4:03
  SPEAKER_01: I mean, if you look from a seasonal perspective, last ten years, you pretty much put in lows on corn market in August, for example.
• 4:11
  SPEAKER_01: Uh the hog market struggles through the month of August, and even the cattle market struggles, doesn't it?
• 4:18
  SPEAKER_00: Yeah, yeah, sometimes it does.
• 4:20
  SPEAKER_00: Um I hate I hate doing too much comparisons between pork and beef right now.
• 4:26
  SPEAKER_00: I hope that I hope that this momentum we're seeing in the beef world can trickle in and help pork demand stay strong a little longer this year than in years past.
• 4:36
  SPEAKER_00: But we do have very different supply situations over the course of the next month.
• 4:42
  SPEAKER_00: Whereas the hog industry should probably experience a four percent increase in available supplies.
• 4:50
  SPEAKER_00: We'll we'll be pretty heavily reliant on Saturday kills after Labor Day, whereas that cattle industry um just no real signs of of additional supplies coming.
• 5:04
  SPEAKER_01: Very much so.
• 5:06
  SPEAKER_01: Interesting.
• 5:07
  SPEAKER_01: Um any other final thoughts on the hogs this week, any of the trade action, what you've seen, anything niche in the market today that's caught your eye.
• 5:19
  SPEAKER_00: No, I I guess spot fundamentals, they're they've been they've been pretty flat this week.
• 5:24
  SPEAKER_00: Like I said, slaughter numbers are surprisingly low.
• 5:28
  SPEAKER_00: Um carcass weights, they're really not indicating to us that we've backed up any kind of hog supply.
• 5:36
  SPEAKER_00: I wonder a little bit if carcass weights didn't bottom out this past week.
• 5:41
  SPEAKER_00: Um packer-owned weights I know have climbed just a bit throughout the week, and and producer-owned ones are pretty flat.
• 5:47
  SPEAKER_00: But that'll add to some of the negatives as you go forward because, like I said, you'll you'll start having available supply that requires Saturday kills.
• 5:57
  SPEAKER_00: You know, carcass weights typically start going up after Labor Day.
• 6:02
  SPEAKER_00: Um button.
• 6:05
  SPEAKER_01: Hog market's been boring, hasn't it, Mike?
• 6:07
  SPEAKER_00: That's pretty Yeah.
• 6:10
  SPEAKER_01: Especially when you compare it to the cattle market or even grain markets had a lot to talk about lately with Pro Farmer and great, you know, uh crop tours and uh the Trump administration decisions.
• 6:21
  SPEAKER_01: And I mean there's been a lot more going on in those commodities, it seems like, lately, news-wise than the the lean hog market.
• 6:28
  SPEAKER_01: And it just seems like futures they've been trading like it too.
• 6:34
  SPEAKER_00: Yeah.
• 6:35
  SPEAKER_01: All right.
• 6:36
  SPEAKER_01: Well, thank you for your time today, Mike.
• 6:37
  SPEAKER_01: I really appreciate it.
• 6:40
  SPEAKER_00: Sounds good.
• 6:41
  SPEAKER_00: Thank you, Mike.
• 6:42
  SPEAKER_01: And thank you to all our listeners.
• 6:44
  SPEAKER_01: Please reach out to us at professionalegmarketing.com.
• 6:47
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing.
• 6:51
  SPEAKER_01: That's released every Friday.
• 6:52
  SPEAKER_01: Trading commodity features and options involve substantial risk of loss, and it's not suitable for all investors.
• 6:59
  SPEAKER_01: See you next time.