Latest / Professional Ag Marketing Podcast / Escalation Continues | Hog Talk March 20th, 2026

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Escalation Continues | Hog Talk March 20th, 2026 · Professional Ag Marketing Podcast

• 0:02
  SPEAKER_01: Welcome to the Hog Market Talk Podcast.
• 0:06
  SPEAKER_01: Your weekly deep dive into hog market fundamentals, breaking news and industry influence.
• 0:12
  SPEAKER_01: Trading commodity futures and options involves dependent on risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_00: This Mike Minor.
• 0:22
  SPEAKER_02: How's it going, Luke?
• 0:23
  SPEAKER_02: It's going good, sir.
• 0:25
  SPEAKER_02: It uh we got beautiful weather here today.
• 0:27
  SPEAKER_02: What is it outside?
• 0:28
  SPEAKER_02: It's like it's like gonna be 80 tomorrow.
• 0:31
  SPEAKER_02: Smoking nice.
• 0:32
  SPEAKER_02: We'll take it.
• 0:32
  SPEAKER_00: It only like a hundred degree change in the last few days.
• 0:36
  SPEAKER_00: We deserve it from last week.
• 0:37
  SPEAKER_02: And last Sunday was a blizzard.
• 0:38
  SPEAKER_02: Yeah.
• 0:39
  SPEAKER_02: There weren't very many uh pork chops getting grilled last Sunday, but hopefully they're out uh uh uh in in numbers this weekend, huh?
• 0:46
  SPEAKER_00: We're gonna do our best to help out demand this weekend.
• 0:48
  SPEAKER_00: Speaking of that, this is a hog market talk podcast, so let's talk about the hog market here a little bit.
• 0:53
  SPEAKER_00: Luke, uh, you want to just start with a little bit of the pullback we've had here recently?
• 0:57
  SPEAKER_02: Yeah, for sure.
• 0:58
  SPEAKER_02: Uh I want to I want to talk about hogs, but then we I want to talk about this second, this just to uh put it in front of the Iran conflict and how it relates to energy, oil, and corn prices, right?
• 1:08
  SPEAKER_02: Certainly.
• 1:08
  SPEAKER_02: So, you know, hereby, yeah, we we did have a rougher week uh in the in the lean hog complex.
• 1:13
  SPEAKER_02: We kind of were losers all across the spectrum, more up front in the summer, and you know, the deferred's held in just a little bit better.
• 1:21
  SPEAKER_02: Um, but yeah, a few things I'd like to talk about.
• 1:23
  SPEAKER_02: Uh, we got to remember this is March 20th, okay?
• 1:26
  SPEAKER_02: And uh, you know, I think we'll have Cade pull up a few graphs here and we'll just we'll start with the CME index.
• 1:32
  SPEAKER_02: Um, and when you look at the CME index and you look at the trend here through April expiration, awaiting into our spring rally, it is a flatter trend, right?
• 1:41
  SPEAKER_02: It's just uh when you look at that, it's hard to see a lot of years that can you know really get a long ways over 90.
• 1:48
  SPEAKER_02: Blow that up a little bit, Kate, and we'll highlight that a little bit better.
• 1:53
  SPEAKER_02: And so that's a flatter trend, you know.
• 1:55
  SPEAKER_02: That's the backdrop.
• 1:56
  SPEAKER_02: Um, you know, then take a look at cutout, and we'll go just straight straight into the cutout side.
• 2:01
  SPEAKER_02: And again, cutout, you know, we've got a you know, a 98, it's bounced around 100, but you look at the trend too, cutout's kind of flat here.
• 2:08
  SPEAKER_02: It's just it's just normal.
• 2:10
  SPEAKER_02: And you know, cash also you don't need to bring the chart up, cage, but that's it's it's a flatter type.
• 2:15
  SPEAKER_02: And we still have a fair, heavy production run.
• 2:18
  SPEAKER_02: It's not burdensome, right?
• 2:19
  SPEAKER_02: Um, but you know, that's a flatter, uh, flatter tone.
• 2:22
  SPEAKER_02: And then specifically, you know, on the cutout, um, let's look at the belly chart.
• 2:26
  SPEAKER_02: If you look at the belly chart, um bellies have been punching above their weight, and that's really good stuff, Mike, right?
• 2:32
  SPEAKER_02: But this time of year, it's hard to like get bullish bellies from that level.
• 2:36
  SPEAKER_02: So probably a little softer is a little easier path of resistance, right?
• 2:40
  SPEAKER_02: But hard to get bullish to think that that's gonna proper primal up your short term, right?
• 2:45
  SPEAKER_02: Uh, and then the hams.
• 2:46
  SPEAKER_02: Hams, there's been a lot of talking around hams this week, and hams went sub 80 and we broke.
• 2:51
  SPEAKER_02: They didn't quite hold that support.
• 2:52
  SPEAKER_02: And again, I want to, I don't want to cause like huge alarm bells here, but look at the ham.
• 2:56
  SPEAKER_02: Maybe drop, bring your cursor away, Kate, just so we can see the five-year average.
• 3:00
  SPEAKER_02: It's a rough time for the ham trade just here seasonally until we get into a little lice production runs.
• 3:05
  SPEAKER_02: And we're hearing a little softness out of Mexico, kind of the meat traders saying maybe hams aren't just, you know, they're they're not ready to turn and go higher yet.
• 3:12
  SPEAKER_02: So you kind of throw all that, you know, and we we took the index up to 92, took it back here just a little bit.
• 3:19
  SPEAKER_02: Um, we just had a little too much premium in.
• 3:22
  SPEAKER_02: You know, also we'll go back, we'll talk around the Iran conflict, and in our opinion, some some things that changed there this week we need to be mindful of.
• 3:30
  SPEAKER_02: Um, but you know, the future's just pulled back some premium, a little bit of risk off, a little bit of technical selling.
• 3:36
  SPEAKER_02: You know, also next uh next week is the hog and pig report, March Hogan Pig Report.
• 3:41
  SPEAKER_02: Private estimates came out yesterday during the trade, kind of when we had this sell-off.
• 3:45
  SPEAKER_02: And I'm not gonna say I agree or disagree.
• 3:47
  SPEAKER_02: Uh, well, maybe I will, but they came up uh with some higher inventories, like one to two percent more pigs, and and so I just think all that kind of bold uh you know bowed into all that, and we we had ourselves a little bit of setback here, Mike.
• 4:00
  SPEAKER_00: All right.
• 4:01
  SPEAKER_00: Uh what do you want to dive into a little bit deeper after all that, Luke, for some talking points?
• 4:06
  SPEAKER_02: Yeah, so this is an outstanding opportunity to review position.
• 4:09
  SPEAKER_02: Basis is now right.
• 4:10
  SPEAKER_02: Actually, basis is a little better than normal.
• 4:12
  SPEAKER_02: So, you know, we've been kind of dragging our feet a little bit because basis has been wide.
• 4:16
  SPEAKER_02: So get your April position, you know, short up.
• 4:19
  SPEAKER_02: You know, summers, um, if there's any repositioning you can do, if you've got some calls you can buy back, um, you know, take a look at that.
• 4:27
  SPEAKER_02: And you know, we've had, you know, I think uh 12-month margin has dropped here below 30 because corn and meal have cut against us and hogs have dropped right, but you know, just keep working the plan and keep pushing it further out.
• 4:39
  SPEAKER_02: I I can't say I chased a lot of new sales after this sell-off here yesterday and today, um, but sold right up into it.
• 4:45
  SPEAKER_02: So um still, still, still all in all, um, hog cons hog complex is in a good spot.
• 4:51
  SPEAKER_02: It's just it's just March, it's just a little bit slow.
• 4:53
  SPEAKER_02: And I I do want to jump into the beef just a little bit.
• 4:56
  SPEAKER_02: Beef choice is still is still really hot, and there's a lot of things going on that you I'm sure what you guys talked about in your beef podcast, right?
• 5:04
  SPEAKER_02: But my point is beef choice box beef is busted up around or a little better uh than 400 bucks.
• 5:10
  SPEAKER_02: But the point is not so much its absolute value, but it it did break the seasonal trend.
• 5:15
  SPEAKER_02: Uh, it's moved up quicker than normal.
• 5:17
  SPEAKER_02: Both choice box beef and pork cutout will rally in you know in the spring and summer, right?
• 5:22
  SPEAKER_02: This one rallied early.
• 5:23
  SPEAKER_02: So you know, again, it's it's a good opportunity to get rid of decade calls, make sure your position's right.
• 5:29
  SPEAKER_02: Um, feels like they've they've beat this up maybe plenty, but it's also real hard to get, you know, you know, maybe a guy can get a little friendly from 91 bucks where we closed around today here, but um, you know, it's it's it's gonna take some push to to race past 95 and higher.
• 5:45
  SPEAKER_02: That's a little bit harder to see here.
• 5:46
  SPEAKER_02: And 18 days true, 17 days after day, not a lot of time left on that concept.
• 5:50
  SPEAKER_00: Are you worried about uh commodity super cycle, fund massive buying?
• 5:55
  SPEAKER_00: What impact do you think that has on the hog market specifically before we get into commodities?
• 6:00
  SPEAKER_02: Well, well, actually, this blow, this, this, that, that you perfect.
• 6:03
  SPEAKER_02: Uh I I wish I would have could have said I coached you on that's the perfect segue of where I want to go to my next discussion.
• 6:08
  SPEAKER_02: So commodity cycle, I mean the proteins are still in a great spot.
• 6:11
  SPEAKER_02: Um, we still have lower beef supplies, low beef supplies, we have high cutout hog supplies.
• 6:17
  SPEAKER_02: We're we're producing plenty of pork, right?
• 6:19
  SPEAKER_02: But demand's good.
• 6:21
  SPEAKER_02: Um, you know, same thing in kettle, same thing in hogs.
• 6:24
  SPEAKER_02: Corn today is relatively cheap.
• 6:26
  SPEAKER_02: Meat's price, make them big, be top of your grid, right?
• 6:29
  SPEAKER_02: So, you know, the hog industry itself, it's still in some pretty solid footing.
• 6:33
  SPEAKER_02: Um, it's just we've been trading really, really high prices.
• 6:35
  SPEAKER_02: So, you know, I think that the meat side, the revenue side, we will see what the hog and pig report says next week, but you know, to me, it's it's stable-ish type of breeding herd.
• 6:45
  SPEAKER_02: We may be adding a few here and there, right?
• 6:47
  SPEAKER_02: But supplies, we're all that's that's all in a good spot, demand's in a good spot.
• 6:51
  SPEAKER_02: Um, what we're probably most concerned about, and and this this resonates probably maybe maybe a little bit better with some of our eastern corn belt customers um that are fighting uh a positive corn basis, right?
• 7:02
  SPEAKER_02: And but here in the West, you know, we still have a lot of corn, we've got a negative basis around.
• 7:06
  SPEAKER_02: But let's just take a step back.
• 7:08
  SPEAKER_02: And our our our biggest concern right now uh uh on the livestock side is is margin-based and its inputs, Mike.
• 7:15
  SPEAKER_02: Just just simply put, okay.
• 7:17
  SPEAKER_02: And so I'll put a little bit of backdrop.
• 7:18
  SPEAKER_02: I don't have a chart up to Nescade to get a chart, but 2023 was really rough in the hog industry.
• 7:23
  SPEAKER_02: It wasn't because meat price was so horrible, it's because corn was so expensive.
• 7:27
  SPEAKER_02: You had six, seven dollar corn, you had a hundred dollar cost of production.
• 7:31
  SPEAKER_02: It's just it's really hard to make money with with high-priced corn in in the hog complex, in the in in protein complex in general, right?
• 7:38
  SPEAKER_02: And so generally speaking, and we saw like as our margins cut week to week, yeah, we lost some revenue, but we had higher corn.
• 7:46
  SPEAKER_02: Um, what could kind of mess this thing up?
• 7:49
  SPEAKER_02: It's a little longer term out, is we get into a much higher cost scenario on our inputs, corn and meal.
• 7:56
  SPEAKER_02: And so I'm gonna dive into the Iran conflict.
• 7:58
  SPEAKER_02: And we, you know, now what are we?
• 8:00
  SPEAKER_02: You told me this morning, how many days into this are we?
• 8:03
  SPEAKER_02: Just about two weeks.
• 8:04
  SPEAKER_02: Two weeks, 14, 13, 14 days in.
• 8:06
  SPEAKER_02: Yeah, I mean, it was February 28th.
• 8:07
  SPEAKER_02: You know, and and a little bit more now.
• 8:09
  SPEAKER_02: When when Trump started this, I mean he he wanted to to to to neutralize the new Iranian nuclear threat, right?
• 8:15
  SPEAKER_02: And I I I think that's pretty pretty well been achieved, or at least a long way towards it, right?
• 8:21
  SPEAKER_00: It's delayed their capabilities of uh nuclear activity.
• 8:25
  SPEAKER_02: At the minimum, right?
• 8:26
  SPEAKER_02: Um, you know, and then a you know, a regime change, uh regime change, I think that was in the wish list, right?
• 8:32
  SPEAKER_02: Yeah, the question is how much resolve will we have towards I think the Israelis want the regime change really, really.
• 8:38
  SPEAKER_02: I think they're the ones driving that, yeah.
• 8:39
  SPEAKER_02: And they're they're continuing to pound, right?
• 8:42
  SPEAKER_02: But as this thing, I mean, it's it's what what the the mark is today is it to us it escalated this week as we went we we started attacking both us and Israel, uh um, some natural gas, some petro plants, um, some different type of infrastructure, right?
• 8:57
  SPEAKER_02: Um that has you know that has a longer reach.
• 9:01
  SPEAKER_02: And then I I want to just put in perspective, um, you know, we're you know, we've we've we've increased oil capacity tremendously in the U.S.
• 9:08
  SPEAKER_02: In fact, Kate, if you've got that chart handy, we are the world's largest producer of oil now, Mike, right?
• 9:13
  SPEAKER_02: That's the right stat.
• 9:14
  SPEAKER_00: Correct, 22%.
• 9:15
  SPEAKER_00: Yeah, we'd be about double anyone else.
• 9:17
  SPEAKER_00: Iran is fifth on that list.
• 9:20
  SPEAKER_00: And you just on the impact of trade alone, you know, the Strait of Hormuz kind of being the the chokehold point, Iran is still holding on us.
• 9:28
  SPEAKER_00: Uh 38% of the oil that goes through the Strait of Hormuz goes to China.
• 9:32
  SPEAKER_00: However, all the other oil that goes through there also goes to other Asian countries, Luke.
• 9:38
  SPEAKER_00: So the leverage we have over China specifically right now is great.
• 9:42
  SPEAKER_00: But over the past, I'd say 24 hours, 48 hours, a lot of the headlines have revolved around Iran's intensified uh attacks on oil and natural gas facilities all around the Gulf, you know, like the last couple days.
• 9:57
  SPEAKER_00: And that's that's really raised the stakes on things because of that key infrastructure taking some pretty massive hits uh lately.
• 10:04
  SPEAKER_00: So uh we're not just cutting, we're not just at a point where we're kind of on a chokehold at the Strait of Hormuz.
• 10:12
  SPEAKER_00: Now we we do have damaged facilities that will have long-term impacts on the industry.
• 10:18
  SPEAKER_00: So Brent to the WTI, pretty massive spread now between the two, um, which would be U.S.
• 10:24
  SPEAKER_00: oil basically versus the rest of the world.
• 10:26
  SPEAKER_00: The rest of the world's getting pretty expensive compared to the U.S.
• 10:29
  SPEAKER_00: because we really don't have a problem here.
• 10:31
  SPEAKER_00: We're a net exporter.
• 10:32
  SPEAKER_00: Uh, it just depends on what oil's worth for the rest of the world compared to us, really, Luke, at the end of the day.
• 10:38
  SPEAKER_00: So capabilities of commodity super cycle, yes, but it revolves heavily on the backs of this Iran conflict, continued intensity and major geopolitical disruption and infrastructure through the Middle East for uh for the energy space, particularly.
• 10:57
  SPEAKER_02: Yeah, absolutely.
• 10:58
  SPEAKER_02: So the uh uh thank you for that.
• 10:59
  SPEAKER_02: And and where I was, you know, just wanted to put some perspective is is uh we're not short on oil domestically here in the States, right?
• 11:06
  SPEAKER_02: We're seeing gas and diesel prices go up.
• 11:08
  SPEAKER_02: Diesel's five bucks at the pump, right?
• 11:11
  SPEAKER_02: But we can purchase it, right?
• 11:12
  SPEAKER_02: It's just it's it's getting more expensive.
• 11:14
  SPEAKER_02: Other spots around the world that are more uh dependent on this Iranian or Middle Eastern oil, like we we heard stories just like Australia, for example, like they're running out of gas, like lines at the pumps, they're running out of diesel more specifically, right?
• 11:28
  SPEAKER_02: So you've got that they import everything.
• 11:30
  SPEAKER_02: You've got yeah, you've got that broader effect in other countries that are more susceptible, it's a bigger effect, right?
• 11:35
  SPEAKER_02: And so how that boils in, um, you know, when we take a look at energy, uh, you know, if we put the crude to corn chart up, I mean, there's a very strong correlation where energy, where oil goes, corn goes, right?
• 11:48
  SPEAKER_02: Um, obviously, corn to ethanol, uh, you know, that that's it's got a few limitations at the pump supply chain and this.
• 11:56
  SPEAKER_00: But they just like to buy it for a fund, money, flow, inflation hedge in general, anyway.
• 12:00
  SPEAKER_02: Absolutely, but it correlates, and quite frankly, more now than ever.
• 12:03
  SPEAKER_02: I mean, because just you know, above$80 crude, like soy oil flows right into diesel.
• 12:08
  SPEAKER_02: Yeah, and there's no limitations.
• 12:09
  SPEAKER_02: You can have a high diesel soy oil blend, right?
• 12:12
  SPEAKER_02: California's proved it.
• 12:13
  SPEAKER_02: Yep, California's proved it.
• 12:14
  SPEAKER_02: So, and then you've got, you know, we're gonna have next week, uh not next week, Tuesday, two Tuesdays with the 31st planting intentions report and the whole big debate.
• 12:22
  SPEAKER_02: I mean, are we 94?
• 12:24
  SPEAKER_02: Are we 92, or you know, where is all that at?
• 12:26
  SPEAKER_02: But you know, this this the increase in fertilizer cost because of the Iranian conflict, I mean, it it doesn't help gain more acres, right?
• 12:34
  SPEAKER_02: Um, and then you know, we haven't had a drought situation in the past what two or three years in either North or South America and long-range forecasts, and I always get a little bit uh uh what's the right word, skeptic.
• 12:48
  SPEAKER_02: The weather is hard to predict, but it's it's a dry spring.
• 12:50
  SPEAKER_02: That's good for planting.
• 12:52
  SPEAKER_02: What's that plant in the dust bins will bust?
• 12:53
  SPEAKER_02: Is that the saying, right?
• 12:55
  SPEAKER_02: And then good rain through the summer and and and and into the fall, right?
• 12:58
  SPEAKER_02: So it's not like looking droughtdy on the forecasting, right?
• 13:01
  SPEAKER_02: But you know, if this oil runs, this conflict moves, uh, and we run into higher feed costs because big picture, I mean, four, five dollar corn, that's still in the reasonable corn.
• 13:14
  SPEAKER_02: That's it's it's it's still kind of cheap corn, right?
• 13:18
  SPEAKER_00: Yeah, um and even uh like meal was up nine dollars yesterday at a twelve dollar trading range.
• 13:23
  SPEAKER_00: So you're seeing some really big volatility there.
• 13:25
  SPEAKER_00: Something a lot of folks really weren't worried about either was meal prices going higher.
• 13:30
  SPEAKER_02: Absolutely, absolutely.
• 13:31
  SPEAKER_02: So you talk what what are we worried about?
• 13:33
  SPEAKER_02: Well, how do I sum it up?
• 13:34
  SPEAKER_02: It's just you know, as as as we crush pigs and we cover pigs, we we need to be a minimum synced up on the crush side, on the corn and meal side.
• 13:42
  SPEAKER_02: We do tend to like a little more options out in the I'm talking new crop, right?
• 13:47
  SPEAKER_02: Uh on the corn.
• 13:48
  SPEAKER_02: Um, well, we don't mind some flat price on the meal by any stretch of means.
• 13:52
  SPEAKER_02: Um, but it went from, you know, especially talking to some of our Western corn build-in users where we still are chucked with old crop, right?
• 14:00
  SPEAKER_02: Um, we you know, we need to really look at this.
• 14:02
  SPEAKER_02: And what's one of the biggest threats to our business is if this inputs get away from us, it's hard to get meat prices high enough to offset that.
• 14:11
  SPEAKER_02: So, you know, we're we're absolutely suggesting if you know if you're a little behind, maybe get a little caught up, maybe a little ahead.
• 14:18
  SPEAKER_00: It's starting time to start running some what if strategies on the inputs.
• 14:21
  SPEAKER_00: Absolutely.
• 14:21
  SPEAKER_02: Let's let's let's not get complacent on the wheel because that again, and hopefully this all gets done and behind us and you know, and we can move past it.
• 14:29
  SPEAKER_02: But you know, there's some of these things, once you set these wheels in motion, they don't turn on a dime.
• 14:33
  SPEAKER_02: So I guess that's the biggest thing that you know you know, I think's changed week to week.
• 14:37
  SPEAKER_02: And again, it just it felt like with the infrastructure, the longer term, the thing did escalate to a point that it's a little harder to turn this back quicker, right, Mike?
• 14:46
  SPEAKER_02: For sure.
• 14:46
  SPEAKER_00: All right, any other final thoughts for our listeners today?
• 14:49
  SPEAKER_02: Well, I think the last one, I'm gonna get myself in a little trouble with this, but uh here in about 20 minutes, Iowa State's got a little basketball game there.
• 14:56
  SPEAKER_02: So go Cyclones.
• 14:58
  SPEAKER_00: And go Jackrabbits.
• 14:59
  SPEAKER_00: We play here at 1 30 this afternoon.
• 15:01
  SPEAKER_00: We'll see if we can make it first past the first round of the dance.
• 15:05
  SPEAKER_02: All right, thanks, sir.