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Hog Talk: Bright Spot · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_01: Welcome to the Hog Market Talk Podcast with Professional Egg Marketing.
• 0:05
  SPEAKER_01: Come here to get fresh updates on what's happening week to week within the Lean Hog Complex.
• 0:10
  SPEAKER_01: Trading commodity futures 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 Minor.
• 0:26
  SPEAKER_01: Let's cross.
• 0:27
  SPEAKER_01: Today is October 23rd.
• 0:29
  SPEAKER_01: I've got Luke back with us here.
• 0:30
  SPEAKER_01: How's it going?
• 0:31
  SPEAKER_00: It's going well, man.
• 0:32
  SPEAKER_00: How are you doing today, Mike?
• 0:33
  SPEAKER_01: Not too bad.
• 0:34
  SPEAKER_01: We are just slavin' away, trying to keep up with all the latest headlines regarding these market moving items.
• 0:40
  SPEAKER_01: You know, not so much on the lean hog market, so it'll be refreshing to talk about things like actual fundamentals, probably uh do in these e commodities.
• 0:49
  SPEAKER_01: Things like feeder cattle, uh, even the soybean market here, we've been moving around very dramatically given the recent geopolitical action going on between Trump and some of these allied countries and not so ally here lately in trade talk.
• 1:04
  SPEAKER_01: So uh I want to get a glimpse of just what you're focused on in the hog industry this week, Luke, and uh what you think is moving these markets.
• 1:11
  SPEAKER_01: December here, down 62 cents again today.
• 1:14
  SPEAKER_01: After what maybe thought we had a glimpse of hope the last two days seem seeming to fade away again here, doesn't it?
• 1:20
  SPEAKER_00: Yeah, no doubt.
• 1:21
  SPEAKER_00: We've had you know we've had a pullback in these markets, Mike, but I'm gonna try to put a little bit of an optimistic spin on it.
• 1:26
  SPEAKER_00: I mean, it it is the season.
• 1:28
  SPEAKER_00: I mean, when I say tis the season, it isn't when we move into seasonally adjusted higher slaughter.
• 1:33
  SPEAKER_00: And so when we have more pork to move through the system, that typically takes a little lower price to you know to move it through.
• 1:39
  SPEAKER_00: So I mean, taking a step back, we're definitely off contract ties.
• 1:44
  SPEAKER_00: You know, we're definitely probably you know approaching close to 10 bucks off of the 12-month forward curve, top of profits, but still it's sitting at$25.
• 1:53
  SPEAKER_00: We still have a really nice forward curve in front of us, and we've got some really great things going on, you know.
• 1:58
  SPEAKER_00: So I'll just walk through it.
• 1:59
  SPEAKER_00: Uh, last week's kill mic, uh, it actually came in a little smaller than at least we were expecting it at 258.
• 2:06
  SPEAKER_00: We were thinking it would be more like a 261.
• 2:08
  SPEAKER_00: There was some uh reduction, it was a light Friday.
• 2:10
  SPEAKER_00: I think Tar Hill out, North Carolina lost some production.
• 2:13
  SPEAKER_00: Neither here nor there.
• 2:14
  SPEAKER_00: My whole point with that is is we, you know, in late August and September, back when we were like 3-4% under a year ago, we we were backing pigs up.
• 2:21
  SPEAKER_00: We set it then, it was a reality.
• 2:23
  SPEAKER_00: You know, so the last few weeks we've been catching up on those pigs.
• 2:26
  SPEAKER_00: We've had some bigger production runs.
• 2:28
  SPEAKER_00: The cash market's been kind of tough.
• 2:29
  SPEAKER_00: And I'm not saying the cash market's great, um, but for the time of year, I mean, it's no surprise that packers can buy pigs under index, not over index.
• 2:38
  SPEAKER_00: But this week was different than the last two or three weeks in the cash market.
• 2:41
  SPEAKER_00: Um, we had more activity, more volume.
• 2:44
  SPEAKER_00: Uh, Tuesday, I think it was 16,000, 17,000 head traded.
• 2:47
  SPEAKER_00: Yesterday, I think it was 8,000 head trading, several packers, you know, in the market, actually 9,000 yesterday.
• 2:53
  SPEAKER_00: And so that's all good.
• 2:54
  SPEAKER_00: Maybe we're coming into a little less pigs here.
• 2:57
  SPEAKER_00: We'll see.
• 2:57
  SPEAKER_00: That's kind of my bias.
• 2:58
  SPEAKER_00: Numbers will sell us, tell us that.
• 3:00
  SPEAKER_00: You know, you go to the product mic, and um, yes, we've cracked below that$100 number.
• 3:06
  SPEAKER_00: At least we cracked below it, you know, on the midday yesterday afternoon's number as well at$99.75, but still a very good price.
• 3:14
  SPEAKER_00: Um, still a lot of really good demand things going.
• 3:17
  SPEAKER_00: You've got bellies that are around$130,$135, give or take.
• 3:21
  SPEAKER_00: Cold storage is current.
• 3:23
  SPEAKER_00: Those that catch freezer bids, probably not a lot of downside in the belly.
• 3:26
  SPEAKER_00: That's a good guy.
• 3:28
  SPEAKER_00: Um, with the demand overall has been good.
• 3:31
  SPEAKER_00: Uh, you know, tailgating, you know, college footballs.
• 3:34
  SPEAKER_00: Uh you can kind of see that reflected in the rib.
• 3:36
  SPEAKER_00: Fortunately, the rib's only about 5% of the cutout, right?
• 3:39
  SPEAKER_00: So it's not a big mover like the loin or the belly or the ham, but those are punching way above their weight.
• 3:44
  SPEAKER_00: You know, ribs, pulled pork, I mean, things like that, tailgates, uh, hot dogs, brats, uh, you know, versus hamburgers and T-bones and whatnot.
• 3:53
  SPEAKER_00: Um, that's looking well.
• 3:55
  SPEAKER_00: Uh, the other thing, uh uh hams specifically, you know, hams have been hanging around this 95 to 100 area, about 96 bucks on yesterday's.
• 4:04
  SPEAKER_00: Really uh high value.
• 4:06
  SPEAKER_00: Uh a couple things, uh, deli meat.
• 4:08
  SPEAKER_00: I think people are eating more ham sandwiches at lunch because they're spending more money on hamburger for dinner.
• 4:13
  SPEAKER_00: Turkey, AI bird flu.
• 4:15
  SPEAKER_00: I mean, turkey price is really high.
• 4:16
  SPEAKER_00: We're gaining some share there.
• 4:17
  SPEAKER_00: And then Mexico.
• 4:18
  SPEAKER_00: Mexico hog price is significantly higher than it was a year ago in Mexico.
• 4:22
  SPEAKER_00: High Mexican hog prices, favorable currency exchanges.
• 4:26
  SPEAKER_00: Good 640 reports coming out.
• 4:28
  SPEAKER_00: I mean, Mexico demand is good.
• 4:30
  SPEAKER_00: So, all in all, uh, you know, we're in a we're in a pretty good spot as an industry.
• 4:34
  SPEAKER_00: Uh, wean pig market, you know, continues to be really tight.
• 4:38
  SPEAKER_00: Pigs are now going in early April.
• 4:40
  SPEAKER_00: You're having to, you know, they're pricing in above above break-even, you know, if you will.
• 4:44
  SPEAKER_00: It's also TIS the season as we start to pump out some pits and things like that per season.
• 4:49
  SPEAKER_00: Did he hear a few P DV and purse break, you know, that's normal, but kind of kicking all that up.
• 4:54
  SPEAKER_00: And you know, then the other thing we've, you know, we we've been we've been moving down in December.
• 4:59
  SPEAKER_00: That's kind of what December does this time of year.
• 5:01
  SPEAKER_00: We also, you know, we're flying a little blind with the government, right?
• 5:04
  SPEAKER_00: Yep.
• 5:05
  SPEAKER_00: But uh, you know, we've had a very long position, clearly sold off from the record at the end of September when the government shut down, right?
• 5:11
  SPEAKER_00: Um, but trimming a little profit there, and you can kind of see that in the technicals, you know, December well below the hundred-day moving average, and it's got beat up, it's tracking down, but index is dropping too, right?
• 5:21
  SPEAKER_00: But as you look out into 26, I mean, just we're we're still in a good spot of the cycle.
• 5:26
  SPEAKER_00: You know, if you take a look at the June chart, Mike, the hundred days stop that.
• 5:29
  SPEAKER_00: We never violated it like December, and we've actually rallied up.
• 5:32
  SPEAKER_00: We're back at the 20 and 50 day, right?
• 5:34
  SPEAKER_00: We've kind of moved back.
• 5:35
  SPEAKER_00: Summer contracts have been, you know, performing well.
• 5:37
  SPEAKER_01: So, you know, key resistance there.
• 5:39
  SPEAKER_00: Yeah, yeah.
• 5:40
  SPEAKER_00: I just that's my point.
• 5:41
  SPEAKER_00: We got a lot of good things ahead of us here.
• 5:43
  SPEAKER_00: So um, you know, with all that kind of wrapped around, I mean, we're watching the product obviously, uh, but demand still does look good.
• 5:50
  SPEAKER_00: Um, gonna be looking for hog supply here moving forward in the next few weeks.
• 5:53
  SPEAKER_00: I mean, it's you know, you take a look, I don't I don't see hog supply worse than a year ago.
• 5:59
  SPEAKER_00: I see demand better than a year ago.
• 6:02
  SPEAKER_00: Um, so those are all like you know, really bright things, and we just got to keep keep moving forward.
• 6:06
  SPEAKER_00: And you know, then also basis.
• 6:09
  SPEAKER_00: Basis was super awesome during the October delivery.
• 6:12
  SPEAKER_00: It started out super awesome here in the early December delivery.
• 6:15
  SPEAKER_00: You know, that's a big, you know, it's uh we've beat our budgets on that.
• 6:18
  SPEAKER_00: That's been a really good guy.
• 6:19
  SPEAKER_00: Um, and like I mentioned at the beginning of the call,$25 forward margins, the forward curve, well not at its peaks, still really, really good.
• 6:26
  SPEAKER_00: So yeah, a lot of things to get excited about here, Mike.
• 6:29
  SPEAKER_00: And uh, you know, we'll work through these seasonally adjusted higher times, and um the industry's still in a really good spot.
• 6:35
  SPEAKER_01: All right.
• 6:35
  SPEAKER_01: Well, thank you for your time today.
• 6:36
  SPEAKER_01: We had some really fun things to talk about here.
• 6:38
  SPEAKER_01: Actual fundamentals in this hog market after a little bit of a setback here.
• 6:43
  SPEAKER_01: Thank you for your time, Luke.
• 6:44
  SPEAKER_00: Thanks, Mike.