Market Analysis

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Steve Meyer, vice president with EMI Analytics, offers his perspective on fourth quarter hog markets. Large numbers are moving through the system, but packers continue to compete for that supply.


Don Wick


Steve Meyer, VP, EMI Analytics




Don Wick:  00:04  From the Pork Checkoff in Des Moines Iowa, it’s Pork Pod.  Pork Pod, a look at the hot topics in today’s pork industry. The Pork Checkoff is working for you through various forms of research, promotion, and consumer information projects.  This is Don Wick on behalf of the Pork Checkoff., and today our guest is Steve Meyer, Vice President with EMI Analytics. And Steve, as we take a look at this hog market can we, first of all, look back to where we’ve been throughout this fourth quarter and where you see the trend going? Where do we go from here?

Steve Meyer:  00:29  Well you know we traded down pretty hard back in September and early October, Don, and really I think we had some hogs. That was a bit of a surprise and they got real heavy, then, I think it was probably due to the late opening of the Sioux City plant. They said they were going to be open in July. They had hogs ready to come by then, and at some point those hogs had to get moved on and they were very heavy. And we had to get behind them and so we had that real pressure there that {inaudible} kind of had everybody going oh my god this is going to be awful. And then we kind of tightened this thing up.  In the last six or six weeks, we’ve run roughly half a million hogs lower over that six week period than what USDA had indicated we would have during this time period in the September Hogs and Pigs report.

Steve Meyer:  01:18  So now it looks as though we were keeping a few of those hogs around as weights have gone up. But I’m not terribly concerned about that because we don’t hear much talk of a bunch of hogs looking for a home every week and it looks as though the competition from the new packer has been pretty good. Now Triumph Seaboard or Clemens I don’t think have killed any hogs that weren’t their own yet, but they pulled hogs from some other people and so that’s left some people looking.  The cutout holding here over $80. You know we’re almost two weeks away from Christmas so we’re kind of on the good side of this thing and then we’ve got to survive the January and February demand doldrums that we normally have. But demand has been the key this fall. We’ve had excellent, excellent demand and exports have been as good or better than what we thought they were going to be.

Don Wick:  02:16  We’ve been looking at hog slaughter up in that two and a half million head territory.  You see that continuing here in the near term?

Steve Meyer:  02:18  Yeah yeah we do. We’ve got you know now you can take this with a grain of salt because it has been high for most of these weeks, but we’ve got 262 this week, 259 next week. You know 268, 239, {inaudible}  and then for the last week of the year. So a little bit of down, but not very much, and then we get in to the first part of next year and we’re kind of more of the same, as not over {inaudible} six million but still bumping slaughter capacity. Now that’s based on the September Hogs and Pigs Report, and as I pointed out, it looks like they got the March April June pig crop a little high, because we haven’t had quite that many pigs the last few weeks. But still you know we’re going to run some big numbers here for the foreseeable future.

Don Wick:  02:18  Next Hogs and Pigs report comes out, what, just before Christmas?

Steve Meyer:  03:12  The 22nd of December and it comes out during trading hours,  It’s released at noon Central, 11:00 Eastern. So they did this last fall. It didn’t cause a lot of trouble and so I’m not too concerned about it but it is different. So you need to look for that on the 22nd of December.

Don Wick:  03:33  With these numbers, obviously we’re seeing some good competition between those packers.

Steve Meyer:  03:41  We are!  I mean, and you know, they haven’t, we kind of have been on a little bit of a downslide the last couple of weeks, but we found some strength late last week in this cash market. And you know given the numbers that we’ve had I think we’ve performed remarkably well. And then you look at the futures market, Don, we’ve got eighty four dollars June hog’s today. You know we still got growth out in the countryside on the sow herd, and I think the December Hogs and Pigs report is probably going to say better part of a percent and a half.  And productivity still goes up and so we’re having more pigs next year that we got this year and look where the futures market is.  The last time I ran my cost of returns model, it was 22 dollars profit for 2018 on average and those are the good, those are probably the best producers out there, but even the average would be up around 12 or fifteen dollars a head.

Steve Meyer:  04:22  So you know the outlook is really good. Now I will say this, that market is offering you that money today.  You can go book your hogs, and now you have some still have some basis risk, but I’m not sure you are going to go too far wrong locking in 35 or 40 dollar profits next summer.  And at least on some of them, you know, maybe if it goes to 90, then you have some hogs to sell at 90. This looks awfully good to me.

Don Wick:  04:51  Steve Meyer from EMI Analytics.  Thank you for listening to this edition of Pork Pod.  For more information on this topic or the Pork Checkoff, visit