Latest / Professional Ag Marketing Podcast / Darkest Before the Dawn | Hog Market Talk May 27th, 2026

Transcript

Darkest Before the Dawn | Hog Market Talk May 27th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_00: Welcome to the Hog Market Talk Podcast.
• 0:06
  SPEAKER_00: Your weekly deep dive into hog market fundamentals, breaking news, and industry insight.
• 0:13
  SPEAKER_00: Trading commodity futures and options involves the potential risk of loss and is not suitable for all investors.
• 0:30
  SPEAKER_02: It's going pretty good, Mike.
• 0:33
  SPEAKER_02: We finally got a little bit of uh green on the screen in the hogs.
• 0:36
  SPEAKER_02: Can't say that too many days in the past uh two months or so.
• 0:40
  SPEAKER_01: That we can't.
• 0:42
  SPEAKER_01: Uh let's talk a little bit about what we got going on here.
• 0:46
  SPEAKER_01: Uh I'll add June lean hog futures to the mix here.
• 0:50
  SPEAKER_01: It looks like uh got close to that old low before we found some support the last couple days, but man, that's been a heck of a sell-off.
• 0:56
  SPEAKER_01: If you look at uh these front months, June in particular, we going all the way back, we had about a high on February 4th at uh 112 on June.
• 1:07
  SPEAKER_01: And uh here just a few days ago, Jeff, after a rough couple days right in a row, darkest uh before the dawn there, 9477 and a half was our low on June.
• 1:17
  SPEAKER_01: Uh that's been a rough one, hasn't it?
• 1:19
  SPEAKER_01: It it's gone down pretty hard pretty fast here, just continually, and uh not quite to those old lows, but yeah, what's your take just on the sell-off so far here?
• 1:28
  SPEAKER_01: And just remind our listeners a few of the reasons why we've experienced this hard of a sell-off here over the past uh month or so.
• 1:36
  SPEAKER_02: Well, I think part of it is to, you know, it does you some good to look and stare at some charts for a while, um, because I I do think they're pretty been pretty impactful, especially the tail end of last week.
• 1:49
  SPEAKER_02: Um, you know, there's a lot of technical traders, almost any indicator that you used um look pretty bearish for quite some time, right?
• 1:59
  SPEAKER_02: Um, and you but more importantly, here in the last Thursday, the tail end of last week, you were able to, you know, we had some different people drawing some trend lines.
• 2:10
  SPEAKER_02: You know, you could you can this classic downtrend, right, Mike?
• 2:13
  SPEAKER_02: You can draw some lines across the top of those highs, you can draw some lines underneath those lows.
• 2:20
  SPEAKER_02: And uh what happened there when that when we put in that low is we did bust through the trend line to the bottom side, right?
• 2:27
  SPEAKER_02: And we picked up some momentum.
• 2:29
  SPEAKER_02: Um, and that is that eventually put the low in um in the next couple trading sessions there.
• 2:36
  SPEAKER_02: But so I think that's just an example of uh the activity that we've had in that marketplace.
• 2:42
  SPEAKER_02: You know, we have a technical sellers, been really easy money for them um to get on the short side of these hogs.
• 2:49
  SPEAKER_02: Um, momentum traders have done quite well, right?
• 2:52
  SPEAKER_02: Just um figure out which way the momentum's turning, um get short here for a few days, let the thing float back towards the top in the range and do it again.
• 3:02
  SPEAKER_02: Um, so you've had a lot of money back and forth, I think, in the marketplace doing that.
• 3:08
  SPEAKER_02: Um, and then I I know we've talked about it and we'll we'll hit on it again, you know, as you switch the chart to the one that you have the index with the futures against up there, Michael.
• 3:19
  SPEAKER_02: Yeah, that one.
• 3:20
  SPEAKER_02: Um, you know, blue line here is the CME index, and this is over a pretty long period of time.
• 3:26
  SPEAKER_02: The the you know, the candlestick red and green is uh the June lean hogs, of course.
• 3:31
  SPEAKER_02: But you know, if we had this ongoing issue of we had all this optimism in the marketplace, most represented by the June contract, and then the blue line, CME index, never moved, right?
• 3:44
  SPEAKER_02: It didn't go up, didn't go up, more weeks passed, no good news on cutout, no good news on cash, and the June futures continue to get closer to where the index is at.
• 3:58
  SPEAKER_01: Seems like you can really tell right around that hump at middle of March or so in the CME index.
• 4:04
  SPEAKER_01: It was basically when that gave us a head fake and that was heading higher, when that turned lower and has gone sideways, that is just not what the market was really hoping for here.
• 4:13
  SPEAKER_01: I mean, for a little bit it was fine, but just pretty much since the end of March, beginning of April, they started to lose a little hope day by day, sell this thing off, and uh they said we'll make the market prove us wrong in the long term.
• 4:26
  SPEAKER_01: It seemed like you're Jeff.
• 4:28
  SPEAKER_01: So absolutely.
• 4:29
  SPEAKER_01: Yeah, I mean, how long, how what, four or five bucks is normal this time of the year?
• 4:33
  SPEAKER_01: Like when like so, I mean, you're still sitting at a premium to that CME index today, actually.
• 4:39
  SPEAKER_02: You you are, but a chunk of that got put in there today with June being almost a buck and a half higher.
• 4:45
  SPEAKER_02: So yeah, when you put that low in, um, you know, I I think you had to look at that and say, okay, we're within five dollars of where the index is for sure, maybe four and a half.
• 4:57
  SPEAKER_02: Um, and that was getting become um I want to say pessimistic, but clearly that's maybe the wrong word because there's still a little bit of optimism built in it.
• 5:08
  SPEAKER_02: But if you think about, you know, from middle of May to the middle of June, there's still a big jump in fundamentals there.
• 5:17
  SPEAKER_02: Um, so to say that you won't get four or five dollars of increase in the CME index over the next even three weeks, I I think I just don't think you can say that with a lot of confidence, right?
• 5:30
  SPEAKER_02: So that is the reason why I believe you put the low in, um, is because you did get as close as what you were to the index here.
• 5:39
  SPEAKER_02: And, you know, now as uh you know June puts uh another two bucks of premium in two and a half from those lows, you do start to question it a little bit, just because you're gonna run out of time.
• 5:53
  SPEAKER_02: Um, but you know, as far as you know, you know, do you have to be 97, 98 on June if the index is going to hang out under 91?
• 6:01
  SPEAKER_02: We'll we'll find out.
• 6:02
  SPEAKER_02: I think it's gonna get a little tougher in the coming days, unless we get some really good news as far as product is concerned.
• 6:09
  SPEAKER_01: Speaking of good news here, so I I want to talk about numbers first.
• 6:13
  SPEAKER_01: Let's talk about uh our harvest graph here a little bit, just numbers, and then we can work that into what we've been seeing on cutout and what some of those implications could mean.
• 6:22
  SPEAKER_01: So can can you walk me through some of the things that we've been experiencing on numbers here as of late, probably last week.
• 6:28
  SPEAKER_01: Uh, this week, you had the the holiday, so no kill on Monday, basically.
• 6:33
  SPEAKER_01: What can you break down for me here uh from the transition from last week into this week and then kind of going forward on how things are set up, Jeff?
• 6:41
  SPEAKER_02: Yeah.
• 6:42
  SPEAKER_02: So, you know, one of the things I was getting at as far as um, you know, why do you need to expect some appreciation and seeing the index values, you know, between uh May and to the middle of June is the number side of it.
• 6:54
  SPEAKER_02: So we gotta we gotta get into some smaller numbers here.
• 6:58
  SPEAKER_02: We weren't getting the demand boost that we would like to see um during the month of May.
• 7:03
  SPEAKER_02: Um, we weren't getting product to move higher just because uh of the weather and and the seasonality of that piece of it.
• 7:10
  SPEAKER_02: So that is disappointing.
• 7:11
  SPEAKER_02: We've also not seen it on the beef side, right?
• 7:14
  SPEAKER_02: So that's a little concerning, no doubt about it.
• 7:17
  SPEAKER_02: Um, but numbers will get consistently lower here, and we've seen that in the past two weeks, although maybe somewhat accidentally.
• 7:29
  SPEAKER_02: Um, what I mean by that, you know, is we we had some challenges as far as kills uh two weeks ago.
• 7:35
  SPEAKER_02: We just had a lot of breakdowns in general in the past two weeks from quite a few different packers.
• 7:40
  SPEAKER_02: Um so you know, the two weeks ago, I think we lost over 30,000 because of breakdowns.
• 7:46
  SPEAKER_02: Um, the good news, if you will, is they they weren't worried about making that up um short term.
• 7:53
  SPEAKER_02: So they're gonna make some of that up here in June, which to me says there's maybe just a few less numbers out there.
• 7:59
  SPEAKER_02: Um, and then last week a little bit slower kill going right into the holiday here.
• 8:03
  SPEAKER_02: And then, of course, you got this week of the holiday week.
• 8:05
  SPEAKER_02: So there's gonna be some less product coming out on the marketplace.
• 8:09
  SPEAKER_02: Um, did see a decent jump in the USDA reports uh yesterday on Tuesday.
• 8:15
  SPEAKER_02: We're as of this podcast, we haven't seen the the prints for for Wednesday yet.
• 8:20
  SPEAKER_02: But uh um, you know, quite hopeful that the marketplace, as far as negotiated product values reported on that 602, are gonna start to see some shortening of the supply and represented in some higher prices.
• 8:38
  SPEAKER_01: Seemed like uh this belly chart here.
• 8:41
  SPEAKER_01: That's been one of the big problems.
• 8:43
  SPEAKER_01: Um, what can you tell me about why we're seeing bellies specifically struggle, which is normally something that doesn't, right?
• 8:48
  SPEAKER_01: Especially this time of the year, we normally see it turn around.
• 8:51
  SPEAKER_01: Um we're not necessarily worried about this, are we?
• 8:55
  SPEAKER_01: Or is there a changing dynamic in the marketplace on bellies?
• 8:59
  SPEAKER_01: Like, for example, if I go to a restaurant, the steak's expensive.
• 9:02
  SPEAKER_01: It's probably not likely that restaurants gonna try to wrap that steak with another meat like bacon, for example.
• 9:09
  SPEAKER_01: So exactly.
• 9:10
  SPEAKER_01: Um are we seeing some of that, you think, on consumer side, or uh what do you think is going on with belly?
• 9:16
  SPEAKER_02: Yeah, we're we're not sure.
• 9:18
  SPEAKER_02: Um, that is a concerning part, Mike, as you look for, you know, maybe some chinks in the armor as far as or flying the ointment, as far as uh is there some consumer demand issues starting to show up.
• 9:30
  SPEAKER_02: Uh, you know, that's we're trying to keep a pretty sharp eye on that, on that.
• 9:34
  SPEAKER_02: And otherwise, I don't think we would be really too worried about this at all.
• 9:39
  SPEAKER_02: And we're not super concerned.
• 9:41
  SPEAKER_02: What we're hearing is maybe more from the quick service restaurant business, Mike.
• 9:45
  SPEAKER_02: Um, so you've got some of the beef trimmings aren't doing very well.
• 9:49
  SPEAKER_02: You've got uh the belly markets not doing very well.
• 9:53
  SPEAKER_02: Um, and then that's the reason that we're hearing about it is the quick service um side of the restaurant business is struggling a bit.
• 10:00
  SPEAKER_02: And so that's a little concerning, right?
• 10:02
  SPEAKER_02: That could be the tip of the spear here if you want to talk about uh you know all the pressures that we've been visiting about on the consumer.
• 10:10
  SPEAKER_02: Um, but I I I would think there too, like the seasonality should take care of that.
• 10:17
  SPEAKER_02: So even if we are seeing some bigger picture issues starting to creep in, uh something we need to be mindful of and continue to be watching for.
• 10:26
  SPEAKER_02: But as we get into fewer hogs, um as we continue to be very short beef, as you get into a season where the consumer usually is gonna eat quite a bit more protein, I think you're gonna gloss all that over, even if you do have some underlying issues there, right?
• 10:44
  SPEAKER_02: So um that's a lot of the season that we're coming into is a lot of the reason why we're not getting very worked up about it.
• 10:52
  SPEAKER_02: Um and yeah, bellies, you know, bellies are the uh kind of like the have and have nots of the market, right?
• 10:59
  SPEAKER_02: Like if you've got an extra load of bellies, they get really cheap.
• 11:02
  SPEAKER_02: If you're uh load too short on bellies, they get expensive in a hurry.
• 11:07
  SPEAKER_02: So I think that's what you'll see happen here as our production decreases.
• 11:11
  SPEAKER_02: Um, I think they'll take care of itself.
• 11:14
  SPEAKER_01: What else do you got for us on uh the market here before we kick it over to a few other outside things and uh and what we go in on got going on next week, Jeff?
• 11:23
  SPEAKER_02: One of the things that we're talking about this week, and and we haven't seen this for a while, but you know, all of those months like October, the futures months of October, December, February, even April, you know, they're all trading, they're all trading lower than where the CME index came in for those respective uh expirations, right?
• 11:44
  SPEAKER_02: This past year.
• 11:45
  SPEAKER_02: So this is something to note.
• 11:47
  SPEAKER_02: Um, I think it helps to take a couple steps back and a couple steps up once in a while, right?
• 11:53
  SPEAKER_02: Uh there's no longer a lot of optimism priced into these futures markets, and that's okay.
• 11:58
  SPEAKER_02: You know, if markets go up, markets go down, right?
• 12:02
  SPEAKER_02: And and if they stayed the same the whole time, nobody would have any opportunities.
• 12:06
  SPEAKER_02: So I think it's one of those things you keep your head on straight and uh look for the opportunities when they present them.
• 12:13
  SPEAKER_02: Don't need to force it when they're not there.
• 12:16
  SPEAKER_01: All right.
• 12:16
  SPEAKER_01: Well, next Wednesday, I'm gonna be at the World Pork Expo with you.
• 12:20
  SPEAKER_01: I believe that goes Tuesday through Thursday, their June.
• 12:23
  SPEAKER_01: Excellent.
• 12:24
  SPEAKER_01: And uh we're gonna have a party.
• 12:26
  SPEAKER_01: It's gonna be fantastic.
• 12:27
  SPEAKER_01: Please stop on by uh our uh celebration down there.
• 12:31
  SPEAKER_01: We'd love to run into you, uh all of you, and uh please introduce yourself.
• 12:35
  SPEAKER_01: Uh I'll be there.
• 12:36
  SPEAKER_01: It'll be a fun time.
• 12:38
  SPEAKER_01: So please check in with us at World Pork Expo uh next Wednesday at our get together there.
• 12:43
  SPEAKER_01: And a few other things worth mentioning here, Jeff, is just outside market-wise, we've had very clashing, very fluctuating, conflicting signals coming out of the U.S.
• 12:55
  SPEAKER_01: and Iran situation when it comes to the news we've had in the last 24 hours or so.
• 13:01
  SPEAKER_01: Crude oil is held down most of the day.
• 13:03
  SPEAKER_01: Um, that's very significant, I think.
• 13:05
  SPEAKER_01: We're down about four bucks in the front month.
• 13:07
  SPEAKER_01: We're only 89 bucks on July crude oil here.
• 13:10
  SPEAKER_01: But the corn market specifically, we're down another five cents today.
• 13:13
  SPEAKER_01: So July's at 452.
• 13:15
  SPEAKER_01: D'Es is at 477 at the close today.
• 13:18
  SPEAKER_01: That support level was supposed to be around 480.
• 13:20
  SPEAKER_01: That was kind of a key support, and we did close below that in a pretty significant way.
• 13:25
  SPEAKER_01: So it'll be interesting to see how the markets react here.
• 13:28
  SPEAKER_01: It's obviously a lot in the up in the air here.
• 13:30
  SPEAKER_01: We've got the next two weeks are dry.
• 13:32
  SPEAKER_01: If it's dry after that, the let trade is likely to look at that pretty hard.
• 13:36
  SPEAKER_01: And then also, obviously, crude oil is all over the place with that conflicting uh uh reports between Iran and the United States, with just Trump saying we've got control of it.
• 13:47
  SPEAKER_01: Don't worry.
• 13:47
  SPEAKER_01: Uh, we're just worried about uh this regime change.
• 13:50
  SPEAKER_01: Iran saying, yeah, the straits not open.
• 13:53
  SPEAKER_01: We're not signing anything.
• 13:54
  SPEAKER_01: So pretty conflicting reports from the two sides that don't seem to be getting uh anything resolved.
• 13:59
  SPEAKER_01: And uh from the other perspective of uh just things influencing some of those outside markets and whatnot, uh China after those trade negotiations, it's still up in the air a little bit.
• 14:09
  SPEAKER_01: Like, are they gonna come in and buy U.S.
• 14:11
  SPEAKER_01: corn by the end of this year or not?
• 14:13
  SPEAKER_01: Um the corn market in particular, when I'm following that, I'm I'm a big spread guy.
• 14:18
  SPEAKER_01: So looking at December to July, that spread's been weakening.
• 14:21
  SPEAKER_01: Uh we we closed over 26 cents of carry there.
• 14:24
  SPEAKER_01: So the the spreads aren't real concerned about a the uh the China's gonna come in, buy a bunch of old crap corn today.
• 14:30
  SPEAKER_01: Looks like we planted a lot of it until the market proves us wrong.
• 14:33
  SPEAKER_01: We're probably gonna build some carry, Jeff.
• 14:35
  SPEAKER_02: They're kind of acting like they're pricing in a big crop uh to some extent as you look at the what the spreads are doing, and even you know, obviously the the charts themselves.
• 14:45
  SPEAKER_02: I don't seem like it might be a tick early for that, but that's the way the market's got a feeling for, don't it?
• 14:50
  SPEAKER_01: Yeah, the bulls are gonna have to hang their hat on this one for a bit and just kind of wait around.
• 14:55
  SPEAKER_01: The moment they get something bullish, I think they will latch onto it pretty quick.
• 14:59
  SPEAKER_01: I don't think it's gonna take much.
• 15:01
  SPEAKER_01: Um, but in the meantime, you just drift a little lower here this time of the year without any bulls uh getting fed, I think, Jeff.
• 15:07
  SPEAKER_02: So that's the uh the part that we missed on the hog part of the conversation too, was the weather side, Mike.
• 15:12
  SPEAKER_02: We we haven't put any heat on these pigs yet this year.
• 15:15
  SPEAKER_02: Um, and that's that's happening here and over the next couple weeks, similar to the discussion on the corn as far as the forecast goes.
• 15:22
  SPEAKER_01: All right.
• 15:23
  SPEAKER_01: Well, thank you for your time today, Jeff.
• 15:25
  SPEAKER_02: Thank you.
• 15:25
  SPEAKER_02: Take care.