Alberta Pork Market Report January 25th 2019

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Pork Market Report

January 25, 2019

 

Feral pigs transmit disease

Hog disease prevalence is on the rise globally, with help from feral pigs, a growing population in western Canada. Read more.

Board nomination deadline approaches

The nomination deadline for this year’s Alberta Pork Board of Directors is today, January 25, at 4 p.m. MST. Check your inbox for the December 20 email and see the nomination form for more information.

New location for Service Canada LMIAs

Service Canada has changed the processing for Labour Market Impact Assessment (LMIA) applications under the Temporary Foreign Worker Program (TFWP). Read more.

Pricing overview

Hog finishing margins as we know in Canada are affected by 4 major variables namely 1) Hog prices 2) Exchange rate 3) Grain/energy prices and 4) Soy/protein prices.  The impact or change of each variable varies, depending on its value and direction, with all 4 combining to have significant impact on the bottom line for hog producers across the country.

As of late depending on how we look at margins, there has been movement in both directions resulting in 2 sides to the story.  The graph on page 3 illustrates that margins over the past 13 weeks have been increasing since a bottom near the last week in Dec or early Jan.  Margins remain negative but appear to be working their way towards profitability.  The reason for the increase has been mainly due to the upward movement in CASH hog prices which have been significantly impacted by the drop in the Canadian dollar illustrated by the March 2019 CAD$ Futures.  This drop in the Loonie or rise in Exchange rate has significantly aided current margins as has the normal seasonal move in cash hog prices.
The opposite has happened however for forward margins.  Margins for summer months or even fall 2019 months have experienced a significant decline impacted mainly by the recent collapse of the lean hog futures market and the slow but slightly steady increase in the soymeal market.
Producers should not only focus on current hog margins but also be aware of costs in the future to allow for better decision making on forward margins should the opportunity present itself as it did a few short months ago.

Weekly hog price recap

Cash hogs reported improved values throughout most of the week on mostly moderate packer bid volume. Stronger gains were reported at the start of the week, when wholesale pork values were also reported higher. Wholesale pork cutout declined modestly from last week’s average, with declines in butt and belly values offsetting rises to loins, hams and picnics. Pork cutout was down $0.12/cwt.

Monitored Canadian hog markets improved $3-$7/hog on the week, with markets derived from CME-based cash up the most. Pricing out eastern Canada, such as Ontario and Quebec, rose between $6-$7/hog. The WHE 19 and the Sig 4 each improved near $5/hog. The WHE 17 and Sig 5 were up the least, near $3.50/hog higher, while remaining Canadian markets were generally up $4/hog. In the US, Tyson values were up $5.50/hog while those out of JM improved $2/hog.

Weekly hog margins

Monitored hog margins improved on the week on stronger cash markets, further aided by a reduction in feed costs and the stable rate of exchange.  Canadian farrow-to-finish feed costs decreased $1.75/hog while those in the monitored US region fell $1.30/hog.

Hog margins out of Ontario and Quebec were up the most between $8-$8.50/hog. Margins calculated off the WHE 17 and Sig 5 improved $5/hog, while remaining Canadian margins were up $6-$7/hog. In the US, hog margins based off Tyson pricing strengthened shy of $7/hog while those out of JM improved closer to $3.50/hog.

U.S. regional margins

  • Tyson: $(10.56) USD X 1.3264 = $(14.00) CAD
  • Morrell: $(15.60) USD X 1.3538 = $(20.70) CAD
Disclaimer: Commodity Professionals Inc. presents this report as a snapshot of the market using current information available at the time of the report. These findings are for informational purposes only and should not be reproduced or transmitted by any means without permission. Commodity Professionals Inc. does not guarantee, and accepts no legal liability arising from or connected to, the accuracy, reliability, or completeness of any material contained in the publication.

 

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