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Hog Talk: Fund Buying · 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.
• 0:25
  SPEAKER_00: This is your host, Mike Minor.
• 0:26
  SPEAKER_00: Let's cross.
• 0:27
  SPEAKER_00: Today is December 11th.
• 0:29
  SPEAKER_00: I've got Pat with us here today.
• 0:30
  SPEAKER_00: How's it going, Pat?
• 0:31
  SPEAKER_01: Good, Mike.
• 0:32
  SPEAKER_01: How are you?
• 0:33
  SPEAKER_00: I am doing very well.
• 0:34
  SPEAKER_00: And you know what else was doing well today?
• 0:36
  SPEAKER_00: Most of the protein markets, let alone most of the egg markets, to be completely honest.
• 0:41
  SPEAKER_00: But uh if you look at the February hogs here today, 84 17 and a half on the close, that was a really nice close today.
• 0:49
  SPEAKER_01: Uh very nice close, buck seventy-five higher, and uh and uh for that to happen on uh the 11th of December, and and uh as we're going through a uh very robust harvest week to say the left to say the least.
• 1:05
  SPEAKER_01: We've had uh harvested uh you know over 2.7 million pigs last week, and we're gonna bang up against that this week.
• 1:12
  SPEAKER_01: Um strongest couple weeks of pork production in a in a while, especially when we consider weights and and uh the likelihood of us backing up inventory just a little bit here.
• 1:22
  SPEAKER_01: We continue to see some very impressive numbers on the cutout side of things.
• 1:26
  SPEAKER_01: And so pork demand is is good.
• 1:29
  SPEAKER_01: Um it's uh is absorbing these uh relatively large seasonal supplies, and uh and uh as a result of that finally starting to see a bit of a positive reaction uh from the futures market, as you mentioned, you know, led by the February contract here, which Mike, you know, will be the lead month uh after December goes off the board here on on Friday or or tomorrow from from the time we're recording this.
• 1:56
  SPEAKER_01: And so um, and so I imagine that uh traders were considering that just a little bit, just this idea, Mike, that that uh you know once Feb does become that that uh that lead month here, it's gonna it's gonna look a little uh a little cheap, frankly, relative to uh uh what the index is doing this week.
• 2:15
  SPEAKER_01: So, all in all, uh good news.
• 2:17
  SPEAKER_01: Always nice to get some support out of that in the deferred months as well.
• 2:21
  SPEAKER_01: And and uh a good solid close over a hundred bucks, over a hundred and one bucks in change in the July contract, over a hundred bucks in the August contract.
• 2:31
  SPEAKER_01: So again, um some real nice settlements there that we haven't seen for a while in those summer months, and and some interesting opportunities as we look beyond that, even so um so a little quick question and a long answer, but uh uh a real nice trade today for sure.
• 2:47
  SPEAKER_00: A lot of the technical traders it looks like uh they continue to find a little bit more comfort that maybe we found support there recently over the past couple weeks, and it seems like they can build on that.
• 2:58
  SPEAKER_00: But today definitely was a huge technical day.
• 3:00
  SPEAKER_00: A lot of these traders were looking for and in the feb hog contract or even the cattle today, too, as we bump up against some resistance points going forward there.
• 3:09
  SPEAKER_00: But on the uh on the hog side, anyways, um yeah, just a few different things I've been trying to keep an eye on.
• 3:15
  SPEAKER_00: We're approaching the holidays here.
• 3:16
  SPEAKER_00: How do you think that's gonna impact supply as we wrap up 2025 here?
• 3:20
  SPEAKER_00: What do you expect?
• 3:21
  SPEAKER_00: Anything versus normal or is it business as normal?
• 3:24
  SPEAKER_01: Well, I I I do think that we are backing up inventory here just a a little bit in spite of some real big harvest weeks as mentioned.
• 3:32
  SPEAKER_01: Uh we continue to see weights uh creep higher here, Mike.
• 3:35
  SPEAKER_01: And so I do think that's a concern, and then and then that's likely magnified with uh um you know with the shortened harvest weeks as we go through the the Christmas holiday and the new year's holiday here.
• 3:47
  SPEAKER_01: So so we're probably are gonna back up um pigs here just a little bit.
• 3:51
  SPEAKER_01: Maybe that's a little supportive to the product trade just because there's a little less work hitting the market.
• 3:56
  SPEAKER_01: But but um, you know, all in all, we'll probably back things up a little bit.
• 4:00
  SPEAKER_01: And I tell you, at least here in southwest Minnesota, as we're um, you know, recording uh this this uh this podcast, uh we're seeing some fairly significant snowfall here in Laverne.
• 4:10
  SPEAKER_01: And so um maybe that's gonna impact a little bit here too on on movement uh um as this next little weather system sort of sort of passes through here as well.
• 4:21
  SPEAKER_01: So might be a little weather influence, might be a little holiday influence, but uh um we we likely will just back things up just a little bit.
• 4:28
  SPEAKER_00: And that'll look different than last year because as I recall, last year, not very far from the office, I used my snowblower one time last year total.
• 4:36
  SPEAKER_00: So, you know, year over year, anyways, the weather definitely looking a lot different to start off our our winter months.
• 4:42
  SPEAKER_01: Yep, good point.
• 4:42
  SPEAKER_01: Um I want to talk a little bit about the cattle complex and a little bit of strength there.
• 4:46
  SPEAKER_01: What's the what's the reasoning behind that?
• 4:48
  SPEAKER_00: Well, the cash market's going crazy.
• 4:49
  SPEAKER_00: We're having a really nice uh advance week over week in this cash market.
• 4:54
  SPEAKER_00: They're really getting ahead of the kill, it looks like, ahead of the holidays.
• 4:57
  SPEAKER_00: Uh they they've been ramping that up and they're paying pretty aggressively.
• 5:01
  SPEAKER_00: Another$5 higher than last week, it looks like.
• 5:04
  SPEAKER_00: So at this point, we found some really nice uh technical buying on this cattle complex.
• 5:10
  SPEAKER_00: And also the SP 500, some of these outer markets, if you just watch the two of them trade together through the middle of the day, it it is uncanny close.
• 5:19
  SPEAKER_00: I mean, this morning at nine o'clock, they both had a very, very similar bottom, and they traded very close together with one another.
• 5:26
  SPEAKER_00: So I think just from a broad money flow perspective, uh some of these technical traders have really hopped on these protein markets on this run, and they're getting more comfortable by the day today.
• 5:37
  SPEAKER_00: And uh today was a very comfortable technical trade for some of these funds to pile in here.
• 5:42
  SPEAKER_00: And other than that, I mean, fundamentally, I I think uh the cattle market here has just been uh trying to run up and fill a gap here that it's looked at for quite a while now since the end of October.
• 5:55
  SPEAKER_01: Yeah, gap's higher to get there on Feb cattle, so we'll see.
• 5:58
  SPEAKER_01: But uh um that's a that's a good point.
• 6:00
  SPEAKER_01: We've got uh we've been a lot of discussion about that for a while here.
• 6:03
  SPEAKER_01: And so just overall, you know, you mentioned earlier that that hire across the board um in commodities, and and uh do you think that's maybe has something to do with um with the Fed discussion from yesterday?
• 6:16
  SPEAKER_00: Yeah, you know, we cut interest rates yesterday.
• 6:19
  SPEAKER_00: Uh it looks like they're only expecting one interest rate cut going into 26, which that's gonna continue to be the main focus going forward is are they gonna keep this up or not, basically.
• 6:30
  SPEAKER_00: Um so at this point, uh the the question mark uh in in the stock market, so to say, has been is there an AI bubble or not?
• 6:38
  SPEAKER_00: Because the stack the the tech stocks are the one really, really pushing the day-to-day movements erratically.
• 6:45
  SPEAKER_00: At this level, though, it's just a little bit more uncertainty because we're right at the highs basically again.
• 6:50
  SPEAKER_00: So to find new money, to find new buyers at an all-time high in the stock market, you need a pretty good reason to do so.
• 6:57
  SPEAKER_00: And at this point, it's not like the Fed gave us anything too exciting yesterday, but they did cut rates and they said we'll maybe do one next year in 2026.
• 7:06
  SPEAKER_00: And uh looking forward anyways, it there was no shock and awe in yesterday's uh examples that they came out with, basically.
• 7:14
  SPEAKER_01: Yeah, I think all good points, and I would just just uh add to that, I you know, the Fed's um um motivation, desire, hope to deal with their dual mandate of of dealing with um job creation, or at least in this case, um admittedly with frank fragmented data, um negative job creation, um and and and but also stubbornly high uh inflation rates.
• 7:38
  SPEAKER_01: And so trying to thread the needle with uh one rate cut here and then a forecast or or conversation about uh maybe only one in in calendar year 2026.
• 7:49
  SPEAKER_01: And so they're trying to sort of placate both sides here, um, which is gonna get tricky, and we do have a real concern, I think, as we sort of look into 2026 and the threat of stagflation, right?
• 8:01
  SPEAKER_01: Uh um just uh stubbornly high prices, but uh but an economic outlook that uh um um doesn't look quite as rosy.
• 8:11
  SPEAKER_01: And so maybe in that whole shuffle that is supportive to the commodity complex, it certainly does add some volatility opportunity to the commodity complex.
• 8:20
  SPEAKER_01: That that I think is worth noting.
• 8:21
  SPEAKER_01: But beyond that, I get a little bit concerned about any commodity rallies that show that if they are wrapped around you know this idea that uh um some sort of inflationary pressure probability is good for commodities, um, maybe in the short run, in the intermediate to longer term, um, we need to have a consumer that can pay for these things.
• 8:42
  SPEAKER_01: And and uh I I do think that that's a that's an issue going forward here, especially if you take it, you take a look from the the lens or the prism of a of a stagflation sort of a of an economy where where things are just stubbornly expensive but we don't have great economic activity.
• 8:58
  SPEAKER_00: That was our third cut for 2025.
• 9:01
  SPEAKER_00: It doesn't really look like they're gonna be able to be too much more aggressive on this thing going forward.
• 9:06
  SPEAKER_00: They viewed it as a very neutral stance now.
• 9:09
  SPEAKER_00: And Powell's done what he needed to to kind of get through his term, it looks like at this point.
• 9:14
  SPEAKER_01: Agreed.
• 9:15
  SPEAKER_00: Uh any final thoughts on the protein markets here today?
• 9:18
  SPEAKER_01: No, I appreciate the opportunity to uh to engage with everyone today.
• 9:22
  SPEAKER_01: Please uh give us a call.
• 9:24
  SPEAKER_01: You know, it's it's uh it's uh uh I guess uh slightly entertaining to sit here and talk about these markets in the abstract, but uh um the application and figuring out a way to execute on on these opportunities that are being created in the market today that make sense for your business is uh uh is a complicated, unique personal approach.
• 9:46
  SPEAKER_01: And we appreciate the opportunity to visit with with uh grain and livestock producers of all shapes and sizes on on the best way to execute strategies that make sense for your business.
• 9:57
  SPEAKER_00: All right.
• 9:57
  SPEAKER_00: Thank you for your time, Pat.
• 9:58
  SPEAKER_00: Thank you.