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Hog Talk: Refill · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_00: Welcome to the Hog Market Talk Podcast with Professional Egg 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.
• 0:24
  SPEAKER_00: This is your host, Mike Miner.
• 0:26
  SPEAKER_00: Let's cross.
• 0:27
  SPEAKER_00: Today is May 29th, and I've got Luke Wells with us here today.
• 0:31
  SPEAKER_00: How's it going, Luke?
• 0:32
  SPEAKER_01: It's going good.
• 0:33
  SPEAKER_01: Mike, how are you doing?
• 0:34
  SPEAKER_00: Very good.
• 0:35
  SPEAKER_00: Glad to have you back on the show here this week.
• 0:37
  SPEAKER_01: I think to be here, man.
• 0:39
  SPEAKER_00: It'll be a good one to talk about this week on the Hog Market Talk podcast.
• 0:43
  SPEAKER_00: Let's get right into it on the hog market here, Luke.
• 0:46
  SPEAKER_00: It wanted the Lean Hog Futures at least had a little bit of upside, it looked like to it here earlier on in the trading session.
• 0:53
  SPEAKER_00: But how do you think the week's going so far for the lean hog market?
• 0:57
  SPEAKER_01: I think that well, that's a good week, Mike.
• 0:59
  SPEAKER_01: We've we've we've had a we've had a few different things going on.
• 1:03
  SPEAKER_01: I would say uh, you know, cash market continues to be to be very strong.
• 1:08
  SPEAKER_01: Um this afternoon.
• 1:10
  SPEAKER_01: Uh yesterday was a year-to-date high and a new year-to-date high.
• 1:14
  SPEAKER_01: I think it was 103 and a quarter.
• 1:16
  SPEAKER_01: I'm trying to find the report here, Mike.
• 1:18
  SPEAKER_01: Um, yeah, 103 and a quarter top paid this afternoon, weighted average of$100.58.
• 1:25
  SPEAKER_01: Um, so the cash market continues to be strong.
• 1:28
  SPEAKER_01: Um Packers, packers are short pigs.
• 1:31
  SPEAKER_01: Supply is not our industry's challenge right now, Mike.
• 1:34
  SPEAKER_01: Um the thing is though, and and I mean, I think it's a good reminder for for all our listeners.
• 1:40
  SPEAKER_01: I mean, it used to be back in the day when cash would really run, you know, that would really drive the index higher.
• 1:45
  SPEAKER_01: But we've, you know, you gotta remember the index is the average of how pigs are bought in our market, right?
• 1:50
  SPEAKER_01: And a lot of price discovery that used to have a cash component to it does not have that anymore.
• 1:56
  SPEAKER_01: Um, and a big function that is because the cash market's pretty thin on its own, 2% or even less of our daily kill, right?
• 2:02
  SPEAKER_01: So, so you know, the pork cutout has become the featured uh pricing mechanism for how we transfer hogs, and it's also the bigger driver in the in the index.
• 2:12
  SPEAKER_01: So cash continues to surge, but it's it's not giving the index a pop, and that's simply because it doesn't factor into it as much.
• 2:18
  SPEAKER_01: So, so good barometer, good things going on.
• 2:22
  SPEAKER_01: Definitely supply is friendly.
• 2:24
  SPEAKER_01: Um, but the pork cutout, it's it's just been uh a little lackluster, right?
• 2:29
  SPEAKER_01: As we kind of look through this thing.
• 2:30
  SPEAKER_01: But finally this week, we I think we had like a 102.50 in late January, early February.
• 2:36
  SPEAKER_01: That was the year-to-date high that we hadn't ellipsed until until just this week.
• 2:40
  SPEAKER_01: Um, but the you know, after Memorial Day, you know, hopefully some good clearance occurred.
• 2:45
  SPEAKER_01: It's sure the market's acting like that.
• 2:47
  SPEAKER_01: Um, you know, on the meat side, we we've continued to hear good things about ham demand, Mexico specifically, and and hams this afternoon up 620 at 99.16.
• 2:56
  SPEAKER_01: It's it's pulling its weight, belly's up a short four bucks, about 150.
• 3:00
  SPEAKER_01: And yeah, this afternoon's cutout 222 higher, you know, 104.62.
• 3:05
  SPEAKER_01: That's a that's a year-to-date high.
• 3:07
  SPEAKER_01: Um, so all those things are good.
• 3:10
  SPEAKER_01: Um, but you know, as you look at a broader construct, right?
• 3:13
  SPEAKER_01: Choice box beef continuing to be extremely high, poultry prices high.
• 3:17
  SPEAKER_01: I mean, pork's got a good value proposition, and it's while it's moved up a little, it's not moved up in relation to some of the other proteins, right?
• 3:25
  SPEAKER_01: And so that's the mix of the push and the pull, right?
• 3:29
  SPEAKER_01: Um, basis continues to be wider than normal.
• 3:32
  SPEAKER_01: Um, the index is not responding.
• 3:34
  SPEAKER_01: The index is probably in the 94 range, you know, this afternoon, with June futures closing right around 100 bucks today.
• 3:40
  SPEAKER_01: Where did June actually end the day?
• 3:42
  SPEAKER_01: At 108 tick, right, Mike.
• 3:44
  SPEAKER_01: Um, so anyway, that's kind of the structure of the board.
• 3:47
  SPEAKER_01: There's there's a lot of people, there's a lot of good things going on.
• 3:50
  SPEAKER_01: Um weaned pig market uh continues to uh you know to be tight.
• 3:55
  SPEAKER_01: Um health issues uh unfortunately continue to be hanging around the industry.
• 4:00
  SPEAKER_01: I think last week's top, like 63 on the weaned pig market.
• 4:04
  SPEAKER_01: You know, that's uh you know, that's that's that's a negative return buying those pigs.
• 4:09
  SPEAKER_01: So um good things, uh good things out there from the supply side.
• 4:14
  SPEAKER_01: But really, the you know, we said, or I maybe, you know, I've been saying, we've been saying, like this week was a big week for the cutout.
• 4:20
  SPEAKER_01: We you know, a hundred a hundred, a hundred and one dollar cutout, that's not gonna justify a hundred and three or a hundred and four dollar futures, right?
• 4:27
  SPEAKER_01: In the summer in July and August.
• 4:29
  SPEAKER_01: So um it's good to see a little bit of fall through.
• 4:31
  SPEAKER_01: Um, you know, we remain kind of approve it to me, um, cautiously, uh, cautiously optimistic, right?
• 4:37
  SPEAKER_01: But uh, you know, we've had a pretty flat cutout trend, and one year is never like the last year, but last summer we had a pretty flat cutout trend as well, right?
• 4:45
  SPEAKER_01: So yeah.
• 4:46
  SPEAKER_01: Um yeah, it's it's gonna be kind of interesting and we'll we'll we'll watch this through.
• 4:51
  SPEAKER_01: Um, but yeah, we've got you know July and August hogs either right under or a little bit over 103 bucks.
• 4:57
  SPEAKER_01: Um, you know, I mentioned the weaned pig market's been tight.
• 5:00
  SPEAKER_01: You know, also there was a pretty good spread between our summer markets and the fall markets, right?
• 5:04
  SPEAKER_01: But we're you know, right up here, made a new contract high today in October.
• 5:08
  SPEAKER_01: You know, it came and traded over 88 bucks today, came in and settled at 87.90.
• 5:13
  SPEAKER_01: Dees hogs went over 80 today, settled in at 80 bucks.
• 5:16
  SPEAKER_01: Those are kind of big markers, and and um corn can torn corn continues to get a little bit softer.
• 5:21
  SPEAKER_01: We've got Dees uh corn sub 450, right?
• 5:25
  SPEAKER_01: Close to 441 and a quarter today, and you know, make some reasonable crush margins out there.
• 5:30
  SPEAKER_01: So um, you know, just kind of manage that all.
• 5:33
  SPEAKER_01: Um trade obviously has been a big factor in our market this year and and and and will continue to be.
• 5:40
  SPEAKER_01: Uh I I you know there was some, you know, obviously the court system is trying to take a move against that.
• 5:45
  SPEAKER_01: I we haven't had much of a chance to talk about that today, you and I.
• 5:48
  SPEAKER_01: What have you have you read into that much or have an opinion on all that?
• 5:52
  SPEAKER_00: Well, it seemed like most of it was just the reaction to the report.
• 5:57
  SPEAKER_00: Now, did you see a lot of people going out and saying this is a big or small impact?
• 6:02
  SPEAKER_00: Basically, the only impact I saw was the market's reaction to it, which is normally a good you know indicator of how big of a deal it is, is the how strong the market reacts to it.
• 6:13
  SPEAKER_00: And it reacted well right away.
• 6:16
  SPEAKER_00: I mean, last night we were up a hundred points on the SP 500, and then it pretty much closed it closed the day even.
• 6:22
  SPEAKER_00: So I mean, it maybe was a bigger deal right out the bat or raised some questions, and then it it seemed like uh we'll see what the Trump administration says about this.
• 6:32
  SPEAKER_00: It seems far from over at this point, in my opinion.
• 6:35
  SPEAKER_00: But honestly, other than the headline itself saying that the US Supreme Court, blah, blah, blah, shut it down, said it was uh illegal practices, however you want to say it, those headlines came out, but then there wasn't anything after it.
• 6:47
  SPEAKER_00: It seemed like no one wanted to talk about it after that headline.
• 6:51
  SPEAKER_00: So that's the majority of what I saw, Luke.
• 6:54
  SPEAKER_00: How about you?
• 6:54
  SPEAKER_01: Yeah, no same.
• 6:55
  SPEAKER_01: I read the same headlines and it just seemed like after that it was it was kind of kind of pushed aside, right?
• 7:00
  SPEAKER_01: But yeah, you know, big picture, supply, good spot, good demand.
• 7:05
  SPEAKER_01: I mean, protein.
• 7:06
  SPEAKER_01: Um, you know, pork obviously has a uh an oper or great opportunity relative to the other proteins of the market, not just domestically, but globally.
• 7:14
  SPEAKER_00: Um yeah, I had a buddy that isn't even egg in agriculture the other day tell me that uh per protein pork was cheaper than chicken now.
• 7:23
  SPEAKER_00: Per protein.
• 7:23
  SPEAKER_00: So I mean it it's catching the the eyes of consumers at least outside of egg.
• 7:28
  SPEAKER_01: Well, I'm a pork producer, so I'm a naturally uh biased to this, right?
• 7:32
  SPEAKER_01: But I just can't believe people are passing up some of the value that pork has right now in the in the in the meat case.
• 7:38
  SPEAKER_00: And so And you talked about Memorial Day weekend before.
• 7:41
  SPEAKER_00: I know you know this is the start of summer driving season, so I mean gasoline stocks are forecast to fall by like 300,000 barrels going into it.
• 7:50
  SPEAKER_00: It's gonna be a huge week to see how the weekend went for economic activity and how consumers are feeling with the big consumer sentiment uptick recently.
• 7:59
  SPEAKER_00: Uh, how do you think the Memorial Day weekend kind of opening kickoff to the summer uh went for grilling in the pork market?
• 8:07
  SPEAKER_01: Well, I think uh uh uh a little underwhelming from where we want it to go, right?
• 8:11
  SPEAKER_01: I mean, we did we did pick up and make New Year's date highs in the cutout, right?
• 8:15
  SPEAKER_00: But that buying normally occurs for the weekend, how far in advance?
• 8:18
  SPEAKER_01: Oh, a couple weeks, perhaps.
• 8:19
  SPEAKER_01: A couple weeks.
• 8:20
  SPEAKER_01: Yeah, just like the 4th of July, mid mid-June, we're gonna start seeing the big buying.
• 8:23
  SPEAKER_01: So so it was about it was about clearance, right?
• 8:25
  SPEAKER_01: Yeah.
• 8:26
  SPEAKER_01: Um and and I think we we we you know we must have had some good clearance, but it's it's easier to go from 100 to 104 than it is from 104 to 115, right?
• 8:35
  SPEAKER_00: And that's probably the jump today, right?
• 8:36
  SPEAKER_00: 104 on the cutout is them refilling after the memorial.
• 8:40
  SPEAKER_01: I think so, and I think some good export demand.
• 8:41
  SPEAKER_01: I mean, I think you know, on the trade thing, we we we don't have a stable trade situation, but we have a better trade situation than we had earlier in the year, right?
• 8:49
  SPEAKER_00: So China came in last week and bought, right?
• 8:51
  SPEAKER_00: For the first time in a while.
• 8:52
  SPEAKER_01: There's been some progress made on the US China front and and all that.
• 8:56
  SPEAKER_01: So it's I don't know, it's it's kind of an interesting time, and and you know, the you know, the the rolling 12, so the 12-month forward margins on our sheet are are at or above 20 bucks.
• 9:04
  SPEAKER_01: It depends on where all your costs are at, right?
• 9:06
  SPEAKER_01: That's historically a nice crush margin.
• 9:09
  SPEAKER_01: Uh a big part of that is because corn and meal are very reasonable.
• 9:13
  SPEAKER_01: You can protect some very competitive uh cost to gains here.
• 9:16
  SPEAKER_01: And and you know, we we we you know as hedgers, we we we like this opportunity, right?
• 9:21
  SPEAKER_01: Um I will tell you though that the the raising produ pork, it's uh raising pigs, it's it's as tough as it's ever been out in the production side.
• 9:29
  SPEAKER_01: Disease is is is become uh tougher.
• 9:32
  SPEAKER_01: PERRS is is becoming more vigilorant.
• 9:35
  SPEAKER_01: Uh it's non not as seasonal as it used to be the classic purr season in your November through January type.
• 9:40
  SPEAKER_01: I mean, we're having purr's breaks and PVD breaks, or just a lot of stuff going on here.
• 9:45
  SPEAKER_01: So it's you know, you can talk to one customer that's rolling right along and and and doing really good and making pigs at$40 or$38, whatever.
• 9:53
  SPEAKER_01: But then the next one has a South farm break, and then they got to go to the spot market and pay$60 to replace them, right?
• 9:59
  SPEAKER_01: I mean, so um anyway, just a lot of different dynamics, a lot going on.
• 10:04
  SPEAKER_01: Um, some some some good hedging opportunities, you know, good opportunity in front of us for the summer, and and um, you know, we're just kind of getting this kicked off.
• 10:12
  SPEAKER_01: And and man, Mike, it's uh it's it's it's it's it's it's not boring.
• 10:16
  SPEAKER_01: There's always lots of stuff going on.
• 10:17
  SPEAKER_00: Especially this summer.
• 10:18
  SPEAKER_00: All right, thank you for your time, Luke.
• 10:20
  SPEAKER_01: Hey, before we jump though, Mike, for sure.
• 10:22
  SPEAKER_01: I know we're banging on 10 minutes, so we're gonna get this done, but next week for everybody, World Pork Expo, uh great, great event in Des Moines, Iowa.
• 10:31
  SPEAKER_01: Um, and and I hope we can see a lot of our listeners here.
• 10:34
  SPEAKER_01: Uh, we will have uh a hospitality tent and and some meeting space.
• 10:38
  SPEAKER_01: Uh we're tent G420 uh down at the World Pork Expo.
• 10:43
  SPEAKER_01: We'll have food served during the day and afternoon.
• 10:46
  SPEAKER_01: So anybody is in the area and wants to come talk to us in person, please swing by both on Wednesday and Thursday, June 4th and 5th, and uh and see us down in Des Moines.
• 10:55
  SPEAKER_00: And check out Mike Pearson in our tent as well.
• 10:58
  SPEAKER_00: We will be hosting the Farm Progress this week in egg or business from our tent this year at uh the World Pork Expo.
• 11:06
  SPEAKER_00: So gonna have some cool opportunities.
• 11:08
  SPEAKER_00: Uh please catch us on Sirious Radio and RFT TV uh Friday, Saturday, and Sunday there over the weekend.
• 11:15
  SPEAKER_00: Thanks.
• 11:15
  SPEAKER_00: Take care.
• 11:16
  SPEAKER_00: And thank you to all our listeners.
• 11:18
  SPEAKER_00: Please reach out to us at professionaleggmarketing.com.
• 11:22
  SPEAKER_00: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 11:27
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 11:33
  SPEAKER_00: See you next time.