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Hog Talk: Broad Overview · Professional Ag Marketing Podcast

• 0:01
  SPEAKER_02: Welcome to the Hog Market Talk Podcast with professional egg marketing.
• 0:05
  SPEAKER_02: Come here to get fresh updates on what's happening week to week within the Lean Hog Complex.
• 0:10
  SPEAKER_02: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:16
  SPEAKER_02: 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_02: This is your host, Mike Minor.
• 0:26
  SPEAKER_02: Let's cry.
• 0:28
  SPEAKER_03: Today is November 6th, and I got Nick and Jordan with me today, and we're gonna go over all the markets to start here and then maybe end with some hogs.
• 0:36
  SPEAKER_03: Um pretty volatile day across all the markets today.
• 0:39
  SPEAKER_03: On the soybean side of things, we ended the day down twenty-six and three-quarters on the jan beans, and on corn, we ended down six and a half.
• 0:47
  SPEAKER_03: And on the equities, we had a pretty volatile day there today, too.
• 0:51
  SPEAKER_03: Nick and Jordan, can you please tell me what what you thought of the trade today?
• 0:55
  SPEAKER_01: Yeah, you know, like you said, it was a pretty red day across the board, and you know, kind of looking at the grains here today, you know, off six and a half cents there on corn, um, kind of following them.
• 1:05
  SPEAKER_01: Soybeans down twenty-seven cents.
• 1:08
  SPEAKER_01: You know, last week we had a US China trade deal that you know saw um the US and China agree upon about 440 million bushels for this year, 960 for the next three after that.
• 1:21
  SPEAKER_01: We did see China kind of confirm that US uh China trade deal, but we never saw any quantities.
• 1:27
  SPEAKER_01: So the market is getting a little bit skittish here, I'd say, you know, this week on you know what is actually really happening on you know whether or not these quantities were confirmed.
• 1:37
  SPEAKER_01: Can we actually export 440 million bushels out here this year yet to China?
• 1:42
  SPEAKER_01: Um, you know, those are kind of the questions that are going on.
• 1:45
  SPEAKER_01: And you know, really feel like corn's kind of been along for the ride.
• 1:48
  SPEAKER_01: You know, yesterday traded up to 436, today down to 428, just kind of trading in that range is what what we're kind of seeing on the grain side.
• 1:56
  SPEAKER_00: Yeah, I definitely think Jordan, too, that the the kind of the macro picture of all these commodities is is changing a bit here.
• 2:03
  SPEAKER_00: It certainly feels like we got some pressure on a kind of a macro scale economically, um, especially with you know this government shutdown yet staying in place and then the snap dollars not coming in.
• 2:17
  SPEAKER_00: Um it it really feels like it's it's weighing, particularly on on hogs today.
• 2:23
  SPEAKER_00: Uh, you know, for a long time we thought that the cutout was gonna be supported around 100 bucks, and now that's trading down around 97 here today.
• 2:32
  SPEAKER_00: Uh, we do think that this week is probably uh the biggest harvest week of the year or of the season anyway.
• 2:39
  SPEAKER_00: Um, and you know, we're gonna harvest just under 200,000 here on Saturday.
• 2:44
  SPEAKER_00: Um, and we kind of think that harvest schedules, you know, at least stay steady to lower here from this week out through December, and hopefully that does uh support the the pork cutout here uh going into fall.
• 2:58
  SPEAKER_00: We'll kind of see how that all plays out.
• 3:01
  SPEAKER_00: Um we are kind of looking at this opportunity maybe to shift some positions around a little bit.
• 3:06
  SPEAKER_00: You know, we got quite a bit of equity in our upfront coverage, and and maybe there's some opportunity to to dial back on futures a bit and and move into some option windows as we got equity in a lot of those spring positions.
• 3:18
  SPEAKER_00: That you know, we just got to kind of take that by a producer basis there.
• 3:22
  SPEAKER_00: But all in all, we we you know we hope that uh soon we kind of find an end to this government shutdown deal and and uh and that the you know the macro picture that out there on the equities or on the economic side of things um can hopefully bring this market back a bit.
• 3:40
  SPEAKER_03: So yeah, when I look at the lean hog complex, um looking back here at the beginning of October, Dee's hogs was at$91, and today we we settled just below$79.
• 3:51
  SPEAKER_03: Well, what what what does that kind of tell us from from the um fundamental side of things?
• 3:58
  SPEAKER_01: Yeah, Jaden.
• 3:59
  SPEAKER_01: So I mean we've definitely you know seen quite a bit of um you know money being pulled out of that December contract, right?
• 4:06
  SPEAKER_01: Like you said, you know, we were trading at 90 bucks.
• 4:10
  SPEAKER_01: You know, at that time cutout was trading at$110, right?
• 4:14
  SPEAKER_01: And you know, we really hadn't seen cutout drop below$110 since May of last year, you know, which is you know really fantastic, right?
• 4:24
  SPEAKER_01: You know, we had four months of cutout at$110.
• 4:28
  SPEAKER_01: Now, you know, over the past month, uh cutouts dropped like it seasonally does.
• 4:33
  SPEAKER_01: You know, that's that's definitely not out of the norm, right?
• 4:36
  SPEAKER_01: You know, traded below 110 all the way down to 100 bucks, like Nick said, and we kind of leveled out there for a week or so.
• 4:42
  SPEAKER_01: But you know, these past two days on cutout have definitely kind of pulled it a little bit lower, you know, um 220, I believe two days ago, a buck sixty-five um last night, and that's what's kind of pulled us under this hundred dollar mark, which is weight on the market, especially December, right?
• 4:57
  SPEAKER_01: You know, if if you see, you know, a little bit more of a historical tripe type drop, which you know is um you know, to come here, right, with some bigger kills, you know, do we pull this cutout down to 95 or or 90 bucks is kind of the next story, right?
• 5:11
  SPEAKER_01: If we if we do end up kind of pulling it down to 90 dollars, well, you know, then the board is probably close to to where December comes off at.
• 5:19
  SPEAKER_01: You know, a$90 cutout probably does equate to an$80 index, right?
• 5:24
  SPEAKER_01: Um, so that's kind of gonna be the story, right?
• 5:26
  SPEAKER_01: You know, you look at the individual primals on cutout, hams were the you know a big loser there um last week, lost about five bucks.
• 5:34
  SPEAKER_01: But you know, they're under$90 here, right around$90.
• 5:38
  SPEAKER_01: That's historically where they kind of level off, right?
• 5:40
  SPEAKER_01: And I think that's what you're kind of saying, Nick, is you know, it does seem like we're kind of getting to those kind of levels where you know maybe we've done enough damage to to these uh um port cutout, right?
• 5:52
  SPEAKER_01: Bellies, they've traded down um to that hundred and thirty dollar mark, and that's historically where they kind of trade this time of year.
• 6:00
  SPEAKER_01: They tend to you know want to dip a little bit lower than that, maybe down to that hundred dollar mark.
• 6:05
  SPEAKER_01: So that'd be one I would kind of watch, you know, going forward is probably you know see a little bit more weakness in that belly.
• 6:11
  SPEAKER_00: Yeah, I just would say too, Jordan, I mean the silver lining and all this though is still that we got a very, very good basis off the December futures, right, with relative where the index is at.
• 6:21
  SPEAKER_00: And it for it being here the first week of November here yet, um, to have this kind of basis level off the D's is pretty phenomenal.
• 6:30
  SPEAKER_00: So we're staying pretty aggressive on our December lifting here too, as we're you know, as we're shipping pigs, and and that's kind of the silver lining in what we're seeing with the futures action.
• 6:41
  SPEAKER_01: Yeah, don't forget about those sold calls.
• 6:42
  SPEAKER_01: I think you mentioned that earlier in the podcast, but you know, working through a lot of you know positions and you know, a lot of them sold calls are um you know at a point where you can kind of get them lifted at relative uh values.
• 6:55
  SPEAKER_03: Yeah, just to end the podcast here, Jordan and Nick, I just wanted to dive a little bit into next week, just thinking about next week.
• 7:02
  SPEAKER_03: Um, we're supposed to have a WASD report next Friday.
• 7:05
  SPEAKER_03: What are you guys thinking there?
• 7:07
  SPEAKER_03: What what could we see from that report?
• 7:09
  SPEAKER_01: Yeah, so on that WASD report, that's gonna be kind of interesting, right?
• 7:12
  SPEAKER_01: I mean, we missed an October WASDA report.
• 7:15
  SPEAKER_01: Now you're gonna kind of be looking at this November one.
• 7:17
  SPEAKER_01: Um, the last grain report we got was that stocks report.
• 7:20
  SPEAKER_01: And that stocks report, we were supposed to have 1.3 uh million bushel ending stocks for last year's crop.
• 7:26
  SPEAKER_01: We ended up coming in at 1.5.
• 7:29
  SPEAKER_01: So that's a 200 million uh bushel miss that ended up happening, and that all came from feed and residual.
• 7:36
  SPEAKER_01: So we're bringing in an extra 200 million.
• 7:38
  SPEAKER_01: The USDA already has uh feed and residual up 400 million uh bushels from last year, so about a 600 million bushel swing now.
• 7:46
  SPEAKER_01: So that's gonna be interesting.
• 7:47
  SPEAKER_01: I think that's a big thing that you want to kind of look at.
• 7:49
  SPEAKER_01: The other uh big topic is gonna be yield, right?
• 7:52
  SPEAKER_01: I mean, a lot of people want to kind of pull this yield down on corn as we kind of head um um head out of harvest.
• 8:00
  SPEAKER_01: FC Stone came in this week at a 186.
• 8:02
  SPEAKER_01: They actually raised yield uh by a tenth of a bushel on corn.
• 8:06
  SPEAKER_01: So um those are the two big things that I would kind of look at.
• 8:09
  SPEAKER_01: You know, Jaden, you know, you and Mike uh back in August did your uh crop tour, came in at a 184.
• 8:16
  SPEAKER_01: I'm I'm really starting to think you guys got her pegged.
• 8:20
  SPEAKER_03: Yeah, and yeah, Jordan, I I just think we we've been hearing a lot of problems in that Iowa area has kind of been the store to be told there, but we'll be interested to see what USDA comes out with next week.
• 8:31
  SPEAKER_03: And I guess that's all we have for today, and thanks for being on the podcast, guys.
• 8:36
  SPEAKER_03: And thank you to all our listeners.
• 8:38
  SPEAKER_02: Please reach out to us at professionaleggmarketing.com.
• 8:42
  SPEAKER_02: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 8:47
  SPEAKER_02: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 8:53
  SPEAKER_02: See you next time.