Alberta Pork Market Report, March 6th 2019

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Tractor-trailer training deadline extended

New Alberta Class 1 farm transporters now have an extension to complete the Mandatory Entry-Level Training (MELT) program. Read more.

Semi-annual meetings – this week

Thanks to everyone who has attended our semi-annual meetings so far. Register for an upcoming meeting in Red Deer on March 6 or Lethbridge on March 7. Walk-up registrations are also acceptable.

Small producer survey – U of A Capstone Project

A group of students from the University of Alberta is looking to survey small pork producers as part of their Capstone Project research. Your completion of this short survey will help these students greatly. Take the survey.

Pricing overview

December lean hog futures recorded new contract highs earlier this week, reaching $64.85 US per cwt during Tuesday’s session and are expected to continue steady to higher in the weeks to come.  Unlike nearby months, December has traded with a firm undertone since it came on the board mid last summer.

Much of the upside for the latter part of 2019 is coming from ongoing concerns over the spread of ASF in China and the threat of reduced pork supplies later this year.  To date China has reported 110 cases of ASF in 28 of its provinces with 2 new provinces reporting their first cases in the last week.  New cases in Taiwan and Vietnam are also suggesting the disease is showing no signs of slowing down anytime soon.  Countries like Poland are also experiencing increased cases of the disease on both wild and domestic population of hogs.  With no signs of a solution to the spread of the disease late 2019 and 2020 hog futures have the potential to outperform previous years.
The December futures from 2015 through to 2019 show that the Dec contract does not spend a lot of time above $65.00 US per cwt and only a few weeks in the last 4 years has the contract traded over $70.  Although this year could be one of those years that sees December at, or above $70 hog producers need to remain consistent with their risk management strategies and lock in favourable prices when they are available.
Eternal optimism is a natural trait of most famers and livestock producer’s, which is why we do what we do.  However, with fourth quarter forward contract prices now approaching some of the highest levels in 4-5 years, producers are encouraged to take a serious look at locking in a portion of production.  If today’s prices for the 4th quarter end up being your lowest prices for that period, you will have had a very good end to the year.

Weekly hog price recap

Cash hog pricing reported declines daily, on generally low cash bid volume much of the week. Cash hog bid volume did peak with high volume Wednesday, aligning with the greatest decrease in wholesale pork values on the week. Wholesale pork primal values by comparison generally increased throughout the week, excluding declines Wednesday, bringing cutout $0.39/cwt over the previous week’s average.

Monitored hog markets were generally $3-$6/hog lower from a week earlier, reporting a fifth consecutive week of losses on either side of the border. Market values derived from regional cash base pricing were typically among the weakest on the week. The WHE 19 fell more than $5.50/hog, while those out of the WHE 17 and Sig 5 fell closer to $5/hog. Values out of BP/TCP were down $3/hog while remaining Canadian markets declined around $4/hog. In the US, Tyson values decreased $3.25/hog while those out of JM declined even further, ending $4.75/hog from a week earlier.

Weekly hog margins

Canadian hog margins slide another $3-$4/hog this week, with many reaching their weakest level since September of last year. A decrease in feed costs did offer some support to margins overall, with farrow-to-finish feed costs on either side of the border $1-$1.25/hog lower from a week earlier.

Hog margins out of the WHE 19 declined the most on the week, falling shy of $4.50/hog. Other Canadian hog margins were typically $3-$3.50/hog weaker, with those based off 201-derived hog pricing on the lower end of the declines. In the US, Tyson margins were calculated near $1.50/hog weaker while JM margins weakened $3.75/hog.

U.S. regional margins

  • Tyson: $(17.16) USD X 1.3189 = $(22.63) CAD
  • Morrell: $(27.93) USD X 1.3189 = $(36.84) 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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