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Hog Talk: Snatch and Grab · 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.
• 0:24
  SPEAKER_01: This is your host, Mike Miner.
• 0:26
  SPEAKER_01: Let's cross.
• 0:27
  SPEAKER_01: Today is January 6th.
• 0:29
  SPEAKER_01: I've got Pat with us here today.
• 0:30
  SPEAKER_01: How's it going, Pat?
• 0:31
  SPEAKER_00: Good.
• 0:32
  SPEAKER_00: How are you this morning, Mike?
• 0:33
  SPEAKER_01: Not too bad.
• 0:34
  SPEAKER_01: Well, let's talk about the hog market today.
• 0:36
  SPEAKER_01: We've had some really nice appreciation, especially in these front months here recently.
• 0:41
  SPEAKER_01: It got into the gap almost on February lean hogs yesterday.
• 0:45
  SPEAKER_01: Tell me a little bit about what you're seeing in the hog market right now.
• 0:48
  SPEAKER_00: Well, you know, as we transition into the first full harvest week here in the calendar year 2026, you know, I would let's just start on the supply side first, uh, Mike.
• 1:00
  SPEAKER_00: And, you know, as we went through the month of December, um the influence of heavyweights and large supplies certainly provided a headwind in this market, right?
• 1:12
  SPEAKER_00: We put a lot of pork into the in in into the market.
• 1:15
  SPEAKER_00: We had um a relatively weak cash market, although compared to previous years, even that was fairly well supported.
• 1:24
  SPEAKER_00: Um, but you know what, as we transition again into this first full harvest week um in calendar year 2026, that seems to be switching some.
• 1:34
  SPEAKER_00: Um weights seem to be a bit more manageable.
• 1:37
  SPEAKER_00: Um, there's a little bit of activity in the cash market, uh, you know, already occurring um late last week and and uh a few indications here early Tuesday morning, there's going to be a little bit of interest there as well.
• 1:50
  SPEAKER_00: And so the supply side of this thing um seems to be more manageable.
• 1:55
  SPEAKER_00: Um and then and then by any account, from a historical perspective, from a seasonal perspective, um, you know, cutouts performed amazingly well.
• 2:04
  SPEAKER_00: And and so um, and so as a result of all of that, we're also seeing a really nice um premium starting to being built back into the futures market here.
• 2:16
  SPEAKER_00: And as you mentioned earlier today, Mike, you know, we finally got uh uh current as it relates to um manage money positions and those sorts of things.
• 2:26
  SPEAKER_00: And there's a little bit of of length that's being being built from from outside money, and that's always a good thing.
• 2:31
  SPEAKER_00: And so and so there's a whole lot of good things that's happening as it relates to spot fundamentals, again, especially considering the time of the year that it is.
• 2:39
  SPEAKER_00: Um and uh in the futures market is reflecting that.
• 2:43
  SPEAKER_00: In fact, um it's one of the it's the best crush opportunity that we've seen so far um as we look out into the summer months and and beyond.
• 2:50
  SPEAKER_00: And so um incredible opportunity uh in front of us here as it relates to to managing uh uh margin uh in the deferred time slots here, and and again, a relatively uh positive situation as it relates to spot fundamentals.
• 3:07
  SPEAKER_00: And so, you know, Mike, I I uh um I think on the demand side of things, you know, we continue to expect and or see uh a little bit of a benefit on in the export market as a result of uh uh ASF uh challenges in in Europe, and in Spain specifically, um continue to see decent disappearance into that Mexican uh uh market, uh particularly on the ham side of things.
• 3:32
  SPEAKER_00: And then domestically, you know, I think the U.S.
• 3:35
  SPEAKER_00: consumer is in a um in a U bit a bet a bit of a unique spot from again from the perspective of um, you know, we just got through the holiday season, uh kind of draw down on the checkbooks here a little bit, and and and uh as a result of that, perhaps a little less um restaurant uh economic activity and a little more uh uh uh eating at home and and uh pork is is certainly well positioned in the meat case and in in in grocery stores in in order to compete there.
• 4:04
  SPEAKER_01: So did you notice anything for disappearance through the holidays recording?
• 4:07
  SPEAKER_00: A little early here yet, but I I don't think certainly not nothing uh incredibly negative from a pork perspective.
• 4:14
  SPEAKER_00: Um a little bit of indication for sure from a uh a middle cut or or premium cut uh perspective on the beef side of things.
• 4:21
  SPEAKER_00: And so uh perhaps a bit of an indication uh of of what I'm referencing here.
• 4:26
  SPEAKER_00: So, you know, we'll see as as we go here, but just generally things seem to be uh uh relatively solid, again, especially considering the time of year that it is.
• 4:36
  SPEAKER_01: Yeah.
• 4:37
  SPEAKER_01: I noticed at least around Sioux Falls too, it the mall uh shields, like i it seems like consumers are still spending money at the top of the chain, at least, but it sounds like kind of the bottom lower income groups are are really starting to get stressed through the holidays here.
• 4:52
  SPEAKER_01: So I I have noticed that at least out our back back door.
• 4:56
  SPEAKER_00: Yeah, I think that's that I think that's exactly right.
• 4:58
  SPEAKER_00: Maybe we should take this opportunity just to talk a little bit about um uh what else is going on as it relates to outside influences.
• 5:06
  SPEAKER_00: What is your thoughts as it relates to the um activities over the weekend with Venezuela energy input, all those things?
• 5:14
  SPEAKER_00: Want to talk through that a little bit, Mike?
• 5:16
  SPEAKER_01: Yeah, you know, from my take was on uh through the weekend we kind of woke up after uh the US invaded uh Venezuela.
• 5:25
  SPEAKER_01: It was a pretty major military operation.
• 5:27
  SPEAKER_01: Like I don't want to sweep that part under the rug.
• 5:30
  SPEAKER_01: Like we uh, you know, there's 32 deaths on the operation for the guards for this dude.
• 5:34
  SPEAKER_01: So I mean it was a it wasn't just a snatch and grab deal.
• 5:37
  SPEAKER_01: It was a it was a big deal.
• 5:38
  SPEAKER_01: And the uh broad implications of this, I think, for what happened across whether it be the US or China or Russia, I think it gets everybody involved because Russia was knocking on the door of Venezuela, China was as well.
• 5:54
  SPEAKER_01: Um a lot of it comes back to actually their commodities.
• 5:58
  SPEAKER_01: So it uh the global impact, I think, has yet to be seen from this.
• 6:02
  SPEAKER_01: It'll be a very long game, but I think it's been brewing since Russia invaded Ukraine a few years ago, and that was kind of the start of this whole process.
• 6:11
  SPEAKER_01: And I think uh from a commodity perspective, uh so far it's been very quiet in what the market's reaction to it has been, because a lot of us were expecting Sunday night, like, okay, what's crude oil gonna do at five o'clock, and what are what's the SP gonna do?
• 6:27
  SPEAKER_01: And at five o'clock, it's like, oh my gosh, this is like the most boring market ever.
• 6:30
  SPEAKER_01: Nothing happened.
• 6:31
  SPEAKER_01: Natural gas is the only thing that moved.
• 6:34
  SPEAKER_01: And what we're learning, I think, is that it it takes a decade basically for us to go down there.
• 6:39
  SPEAKER_01: If if we really said today we're gonna we're gonna do this thing, we're gonna go get their oil, we gotta put infrastructure down there, we have to put military people, we have to, you know, get the government on board from them, basically.
• 6:51
  SPEAKER_01: Uh so it's a it's a huge, long, drawn-out process for us to actually start going down there and getting oil, for example, and uh all the other natural resources they have.
• 7:01
  SPEAKER_01: I mean, they're if you look, that country is basically one of the most untapped natural resource places in in the world.
• 7:10
  SPEAKER_01: I mean, they have the largest oil reserve in the world.
• 7:12
  SPEAKER_01: So long term, I think that this is a long-term game.
• 7:16
  SPEAKER_01: I I think there's a lot to be seen yet on it.
• 7:19
  SPEAKER_01: Short term here, it's been much more quiet than I thought it was gonna be, Pat, for market reaction specifically.
• 7:26
  SPEAKER_00: Yeah, exactly.
• 7:27
  SPEAKER_00: And so I think uh nice recap, and I and I just the only thing that I would add to all of that is is just or just reiterate your point of um um both Russia and China are also interested in this area of the world, right?
• 7:41
  SPEAKER_00: And and so it will be interesting to see um what uh potential pushback or blowback there could be as it relates to US-China relations and negotiations, specifically on the soybean side of things.
• 7:55
  SPEAKER_00: And so um, if there's any um immediate potential risk or impact, it might be there, right?
• 8:02
  SPEAKER_00: And so to your point, the initial reaction was is what's crude oil gonna do um on Sunday night trade.
• 8:09
  SPEAKER_00: But I think as as the dust settles here just a little bit, we start working through the week, we're gonna want to start to also pay a little bit of attention to uh to China's reaction to all of these things.
• 8:20
  SPEAKER_00: And and um settle it or not, um there there might be some some repercussions, especially as it relates to soybean trade.
• 8:27
  SPEAKER_01: I know Russia, China, and even Mexico came out, and basically all the other countries are saying that wasn't a cool move by the US.
• 8:33
  SPEAKER_01: So it uh at this point, anyways, they they weren't really for that operation and they've expressed that.
• 8:39
  SPEAKER_01: But a lot of our soybeans haven't actually hit the boats yet.
• 8:42
  SPEAKER_01: I mean, they have a lot of sails on to China, but last week was like the first week we finally started seeing uh soybeans get on a boat and leave.
• 8:50
  SPEAKER_01: So a lot of uh risk from that perspective, Pat.
• 8:53
  SPEAKER_01: Any other final thoughts before we go into the end of the week here?
• 8:57
  SPEAKER_00: No, I don't think so.
• 8:58
  SPEAKER_00: Just um we just uh uh reiterate the importance of managing your risk management plan.
• 9:06
  SPEAKER_00: And uh it's it's uh I think starting to become a little easier to become complacent in these markets.
• 9:12
  SPEAKER_00: I uh again a unique uh crush opportunity uh in the hog complex, but we've also had relatively quiet, docile markets on the input side of things, corn and and and soybean meal in particular.
• 9:26
  SPEAKER_00: And so be careful about that.
• 9:28
  SPEAKER_00: Be careful that we don't uh uh let ourselves fall into some sense of complacency here that that uh um today's opportunity uh can can be maintained for an extended period of time.
• 9:38
  SPEAKER_00: That's when uh at least historically through the years, we get ourselves into a little bit of trouble potentially.
• 9:43
  SPEAKER_01: All right.
• 9:43
  SPEAKER_01: Well, for the rest of the week here, Pat, you're gonna be dropping Lucas and I off at FarmCon this week, uh, tomorrow and Thursday.
• 9:50
  SPEAKER_01: So if any of you are at Far FarmCon, please connect with uh Lucas or I on the app and try to connect.
• 9:55
  SPEAKER_01: And we'll see you there.
• 9:57
  SPEAKER_01: And then Pat, next week, tell us what you got going on in South Dakota.
• 10:00
  SPEAKER_00: Yeah, just a reminder the uh 57th annual South Dakota Pork Congress, uh January 14th and 15th from uh 8 a.m.
• 10:07
  SPEAKER_00: start on uh on Wednesday through 3 p.m.
• 10:10
  SPEAKER_00: on uh on uh Thursday at the Ramcota Exhibit Hall there in Sioux Falls.
• 10:16
  SPEAKER_00: And so um Pro Ag will have a booth there and uh um also have uh a bit of uh of a deal there Wednesday night.
• 10:24
  SPEAKER_00: So contact one of us here at ProAg and and uh looking forward to seeing you next week in Sioux Falls, South Dakota.
• 10:31
  SPEAKER_01: All right, thank you, Pat.
• 10:32
  SPEAKER_01: Mm hmm.