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Hog Talk: Market Tweak · 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.
• 0:25
  SPEAKER_01: This is your host, Mike Miner.
• 0:26
  SPEAKER_01: Let's crow.
• 0:27
  SPEAKER_01: Today is July 17th.
• 0:29
  SPEAKER_01: I've got Luke Wells here with us today.
• 0:30
  SPEAKER_01: How's it going, Luke?
• 0:31
  SPEAKER_00: Very good.
• 0:32
  SPEAKER_00: Mike, how are you doing today, sir?
• 0:33
  SPEAKER_01: We're doing great.
• 0:34
  SPEAKER_01: Well, uh, it is the uh wrapped up for the NPIC.
• 0:38
  SPEAKER_01: Could you tell us anything about your time in Wisconsin?
• 0:40
  SPEAKER_00: Yeah, National Pork Industry Conference, Wisconsin Dells.
• 0:43
  SPEAKER_00: I mean, if if if people haven't been there, it is a great conference.
• 0:46
  SPEAKER_00: We would highly recommend going.
• 0:47
  SPEAKER_00: There's, you know, somewhere in the mid-900 participants, so uh a lot of opportunity to not only connect with producers, allied industries, and and friends across the industry.
• 0:57
  SPEAKER_00: As always, it's there's good content in the show.
• 1:00
  SPEAKER_00: Great.
• 1:00
  SPEAKER_00: It's a family-friendly show.
• 1:02
  SPEAKER_00: A lot of people bring their families.
• 1:03
  SPEAKER_00: Great networking and um, yeah, successful event again.
• 1:07
  SPEAKER_00: Producer producer was uh we got some some good margin in the business today.
• 1:11
  SPEAKER_00: We've got some some pretty good forward margin ahead of us.
• 1:13
  SPEAKER_00: Producer spirits were high, industry spirits were high.
• 1:16
  SPEAKER_00: Everybody's always on the you know, always on the keeping their eye on the ball forward.
• 1:20
  SPEAKER_00: It's not as if our industry doesn't have its challenges in front of us, right?
• 1:23
  SPEAKER_00: But good environment, good time, and we're really uh really happy to see all our our customers, our friends, and our our allied industry partners in industry.
• 1:31
  SPEAKER_00: Very well done.
• 1:32
  SPEAKER_01: Well, let's get into the market here a little bit as we look at the uh last four trading sessions or so.
• 1:38
  SPEAKER_01: We finally had an update yesterday, but we did have about four straight lower sessions there, a little bit of a setback through most of these hog markets.
• 1:46
  SPEAKER_01: What what can you tell us about this future setback that we've had since the last time you and I chatted?
• 1:51
  SPEAKER_00: Yeah, yeah, and and I mean it's all yeah from like a perspective standpoint, Mike, um we we definitely had a setback.
• 1:59
  SPEAKER_00: We're we're probably I mean, we're probably 10 bucks off, maybe even a tick more uh from our our kind of recent high water margin.
• 2:05
  SPEAKER_00: On that front.
• 2:06
  SPEAKER_00: You know, so we we know we had December futures kind of get above 87 and and you know drop down there uh the other day they caught some support, but you know, down around that 78 value, right?
• 2:16
  SPEAKER_00: And I, you know, so the way I've been talking about it, Mike, I and and and I I I'm kind of I I can't call it death by a thousand cuts because I I don't think eighty dollar December's and 20, 20, 22, 23 forward margins is is is death by any mean, but I I'm calling a little attrition by a thousand cuts.
• 2:32
  SPEAKER_00: You know, so let's just walk back into this thing.
• 2:34
  SPEAKER_00: I think there's a you know a very very logical story into this.
• 2:38
  SPEAKER_00: And you know, we like I say we we hit our highs, you know, in December around that 887 type mark.
• 2:44
  SPEAKER_00: You know, at that point we really had like managed money, um kind of at record longs, and they're still very long, right?
• 2:49
  SPEAKER_00: Obviously taking some profit here recently.
• 2:51
  SPEAKER_00: But let's just walk back a few weeks.
• 2:53
  SPEAKER_00: You know, we had a hog and pig report.
• 2:55
  SPEAKER_00: I'm not gonna rehash all that.
• 2:56
  SPEAKER_00: Hog and pig report did say we'd have more pigs than a year ago.
• 3:00
  SPEAKER_00: We had you know December come off at 84.
• 3:02
  SPEAKER_00: We were trading 87.
• 3:03
  SPEAKER_00: The market, uh, do we need do we need to be higher?
• 3:06
  SPEAKER_00: You know, questions, right?
• 3:07
  SPEAKER_00: And then we move forward, we get through the fourth, you know, and we we just we we we have had a little bit of an appreciation post-fourth on the cutout.
• 3:15
  SPEAKER_00: I mean, yesterday afternoon cutout came in somewhere in the 114 range.
• 3:19
  SPEAKER_00: I'll look it up, 114.74.
• 3:22
  SPEAKER_00: So a short five bucks kind of off its 110 kind of balcony.
• 3:25
  SPEAKER_00: But it it's been a little underwhelming.
• 3:28
  SPEAKER_00: Um, you know, 4th of July kill very low.
• 3:30
  SPEAKER_00: Last week's kill a little bit lower, and you know, so kind of just a little underwhelming on the you know, on the port cutout, and then just these continued nicks, right?
• 3:39
  SPEAKER_00: It starts with Canada, and and again, you know, that's going, then China, and then pretty much every country we care about.
• 3:46
  SPEAKER_00: Then you got Japan, that's four percent of our exports.
• 3:48
  SPEAKER_00: You got South Korea, it's three percent of our exports, and then I think what kind of you know, that deeper little cut that just knocks some uh a profitable long out of the market, right?
• 3:57
  SPEAKER_00: Was it was Mexico over last weekend, right?
• 3:59
  SPEAKER_00: That came out on Saturday, if memory serves me.
• 4:02
  SPEAKER_00: And and I just think kind of all that kind of melding together, it just it just it just created a little bit of selling.
• 4:07
  SPEAKER_00: Um, it just and I think you had a you know set the landscape.
• 4:11
  SPEAKER_00: Um, you have you had a profitable managed money long.
• 4:14
  SPEAKER_00: And I mean, if you look at a chart too, Mike, I mean, we went we went right down to that hundred-day moving average.
• 4:18
  SPEAKER_00: That's where we caught some support the other day.
• 4:20
  SPEAKER_00: I mean, almost right on the nose, right?
• 4:22
  SPEAKER_00: Because all in all, well, you know, the the the trade situation and you know, dive into that tariff thing a little bit.
• 4:29
  SPEAKER_00: And you know, I always get a little cautious, Mike.
• 4:31
  SPEAKER_00: Let's not get too detailed in what this is or that is because it changes, it's it's a moving target, right?
• 4:35
  SPEAKER_00: I mean, but if you know 30% tariff to Mexico, well, it's really a it it's it's 5% increase from what's happening today.
• 4:42
  SPEAKER_00: Um, there's there's USMCA compliant.
• 4:44
  SPEAKER_00: A lot of things we work are protected.
• 4:46
  SPEAKER_00: None of that I feel is a safeguard, though, because we're already outside of what was USMCA.
• 4:51
  SPEAKER_00: So there can be retaliations, things can change.
• 4:53
  SPEAKER_00: It's it's it's it's not good.
• 4:55
  SPEAKER_00: I'm not making that argument, but you know, front-end fundamentals, yeah.
• 4:58
  SPEAKER_00: Cutouts not 123 or two at the top, um, but it's one it's one almost 115.
• 5:04
  SPEAKER_01: You know, cash hogs responding really to our kids.
• 5:07
  SPEAKER_00: Yeah, cash hogs.
• 5:08
  SPEAKER_00: I mean, we we it's been a tougher trade post-fourth, but we've set you know a new topic, you know, 116.50, a new topic in this week.
• 5:15
  SPEAKER_00: So, you know, fundamentals are are still pretty good.
• 5:18
  SPEAKER_00: Um, so you know, as I kind of take a step back for this, I mean we've got now got kind of basis, you know, kind of normalized here in August.
• 5:25
  SPEAKER_00: Um, things are still moving, uh, you know, bellies still have an opportunity to run.
• 5:31
  SPEAKER_00: You know, we did bounce that, like I say, that 100 day kind of held that D set 78, held that D.
• 5:36
  SPEAKER_00: So we popped up back to 80, 80, 45.
• 5:38
  SPEAKER_00: So, you know, I say maybe we can catch a little bit of interest here, but we you gotta feed a bull every day, right?
• 5:43
  SPEAKER_00: Yeah, and you know, really, you know, I think what can get some confidence back in this thing is one get through the August one, wherever that all shakes out, right?
• 5:50
  SPEAKER_00: And likely it's gonna be just a continuation of threat, right?
• 5:53
  SPEAKER_00: I mean, that's been the trend, right?
• 5:55
  SPEAKER_00: Um, you know, I've said this a bunch of times.
• 5:58
  SPEAKER_00: Donald Trump's first presidency, he's he did tariffs.
• 6:01
  SPEAKER_00: He campaigned, he said he was gonna do tariffs.
• 6:03
  SPEAKER_00: He got in, he did tariffs, right?
• 6:05
  SPEAKER_00: And it's just it's the world we live in, right?
• 6:07
  SPEAKER_00: Fortunately for us, we're a little bit tip of the spear with 25% of our product getting air.
• 6:11
  SPEAKER_01: I feel like the markets have been responding okay to the tariff news, just in general, that in the first presidency, it was big news.
• 6:20
  SPEAKER_01: Like when he would come out with a tariff or he was gonna do this, a lot more seemed unknown.
• 6:25
  SPEAKER_01: We didn't know his uh, you know, his goals out of the thing and how extreme he was gonna take stuff.
• 6:30
  SPEAKER_01: So I feel like the markets whipsawed a lot more off of it.
• 6:33
  SPEAKER_01: And like this last week we had several trade news deals, like you talked about that he was tariffing this country and that country.
• 6:39
  SPEAKER_01: We had Canada and Mexico and Japan and we had the so I mean the market I feel like has been a little bit more numb to it this time, don't you think?
• 6:48
  SPEAKER_00: They're getting a little bit desensitized to it.
• 6:51
  SPEAKER_00: And I I that that also does again, I I I always they're positioning accordingly still.
• 6:58
  SPEAKER_00: They're positioning accordingly, but I also like Donald Trump is not a guy I ever want to back in a corner.
• 7:03
  SPEAKER_00: And you know, it's the market's taking this, you know, he's gonna back off, he's gonna have the hammer and back off, and you know, I you know, just I I don't know.
• 7:10
  SPEAKER_00: It's just something to keep your eyes on.
• 7:11
  SPEAKER_00: But it does, it does seem like there's some things working.
• 7:14
  SPEAKER_00: Um, you know, also on the global backdrop for protein, why did we get managed money record long?
• 7:19
  SPEAKER_00: Why are they long cattle?
• 7:20
  SPEAKER_00: It's because global protein supplies are tight, right?
• 7:22
  SPEAKER_00: Yeah, and pork's a great value to beef, right?
• 7:25
  SPEAKER_00: Um beef prices are high, it competes well against chicken.
• 7:28
  SPEAKER_00: So we we got a lot of good things going.
• 7:30
  SPEAKER_00: And it, you know, again, we're we're talking about like 12-month rolling margins dropping from a little above 30 to you know a little above 20, but that's still there's still a good profit in the curve.
• 7:41
  SPEAKER_00: And then this whole big background, Mike.
• 7:43
  SPEAKER_00: I mean, it's you know, this crops are looking good, right?
• 7:47
  SPEAKER_00: I mean, we it just each each day we go roll forward here, it's just it's looking like and you know, you can do something about it.
• 7:53
  SPEAKER_00: You can obviously hedge and crush and protect, right?
• 7:55
  SPEAKER_00: But you know, we look like we're gonna have a little bit of a runway here for some pretty competitive cost to gain.
• 8:00
  SPEAKER_00: So, yeah, take it all in perspective.
• 8:02
  SPEAKER_00: Uh, lots of good things going on, but it's you know, again, you know, in our business, commodities, risk, it can all move fast.
• 8:09
  SPEAKER_00: Just keep your eye on the ball and keep doing things that make good sense, Mike.
• 8:13
  SPEAKER_01: All right.
• 8:13
  SPEAKER_01: Well, thank you for your time today, Luke.
• 8:15
  SPEAKER_00: Have a good one, pal.
• 8:16
  SPEAKER_01: And thank you to all our listeners.
• 8:18
  SPEAKER_01: Please reach out to us at professionaleggmarketing.com.
• 8:21
  SPEAKER_01: Check out our other podcast as well, Professional Egg Marketing, that's released every Friday.
• 8:26
  SPEAKER_01: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 8:32
  SPEAKER_01: See you next time.