In the latest edition of the Hog Talk podcast from Ever.Ag Insights, we chat with Tom Brincks, VP of Insurance and Operations on Ever.Ag’s livestock team.

Learn more about lean hog price trends, risk management strategies, and specialty pork products. Tune in now!

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities. Hello and welcome to Hog Talk, brought to you by our AG Insights. On this podcast, we talk with subject matter experts on news and topics affecting the swine industry and hog markets.

00;00;18;12 – 00;00;39;24

I’m your host, Phillip Flores. We’ll get started with a quick market recap as of yesterday, Monday, January 13th. Nearby lean hog futures were at $83.18 per 100 weight, up 4% on the week and up 16% year over year. Today we had the pleasure of being joined by Todd Brinks, ever vice president of insurance and operations. Hey, Tom, how are you today?

00;00;39;24 – 00;00;57;24

Good. Glad to be here. So wrote the notes ahead of the show and noted that we were up 16% year over year in terms of futures prices. We didn’t really have a big fall feed in the fourth quarter. The market has come off a little bit, but it’s still above last year’s levels. What are the 2 or 3 big questions out there for the market right now?

00;00;57;25 – 00;01;18;02

I mean, you bring up a great point talking about, you know, full feed that we didn’t have this past year. I mean, I think there’s probably still a few people in the camp that there could be a little bit of a pullback. But I think the bigger issue facing markets is and I hate to bring up the T word, I’m not talking taxes but potentially tariffs and what what impact it has on our markets going forward.

00;01;18;04 – 00;01;33;17

You know every four years in this country we have a presidential election. And there’s always impacts with elections. I think we’re all sitting on the sidelines waiting to see what the potential impacts are of this most recent election. Yeah, we’re going to go early and go hard. Are we going to kind of settle in? There’s a lot of negotiation being done.

00;01;33;18 – 00;01;53;09

It’s going to be a fascinating first couple of weeks as Mr. Trump returns office I believe next Monday. So from a producer risk management perspective, what’s your general view on things, especially the summers? You know, those prices look pretty good today in a vacuum. Are we coaching towards action? Are we hanging out waiting to see what happens? Where are we on risk management right now?

00;01;53;12 – 00;02;16;11

So I mean really time we have $100 summers. I think it needs attention in person, needs to take a hard look at them. What’s even more attractive about our current $100 summer months is input costs have come down. I mean, soybean meal is continues to drop, basis widening. That’s changed a little bit with Friday’s report. We have guys lined up a corn supply that at numbers they haven’t seen in several years.

00;02;16;12 – 00;02;35;05

So when you look at input costs compared to where the summer months are, you can lock in a fairly attractive margin anytime that opportunity is there. I think a person needs to give it a serious look. Yeah. Yesterday we had June at 102 48th July at 1 or 273, and August at 101 38. So all kind of right there in that 100 zone.

00;02;35;06 – 00;03;02;26

Let’s shift gears a little bit, Tom. You spent a lot of time in the insurance arena, many different facets. And it’s worth wondering what do wildfires in California and other natural disasters mean for the insurance industry? So we’ve seen Los Angeles fire. Lots of talk about the insurance consequences. What does it mean for livestock producers? Anybody who pays a regular insurance bill knows what insurance rates have done the last several years.

00;03;02;26 – 00;03;21;29

So any time you have a disaster similar to California with the wildfires right now, anybody in the insurance space or anybody that’s writing a premium check, it gets your attention in the big scope of things, the California fires, when this is all said and done and, you know, the fires are put out. I mean, we’ve seen bigger disasters than this.

00;03;21;29 – 00;03;41;05

But keep in mind, it’s the state of California. There’s some political opportunities for people to spin it. So I think in the next few months, we will continue to see California’s fires be talked about and be a reason for increased insurance rates, whether that’s actually the case, we all know how things get spun. And this one is ripe to be spun.

00;03;41;09 – 00;04;04;12

So, Tom, you were speaking that sort of at a high level PNC property and casualty perspective. And yeah, I mean, whatever insurance you have on your facilities and your automobiles, those all feel ripple effects, probably from an event like this. But let’s talk about crop insurance and, well, activity in the PNC space doesn’t have any direct impact on crop insurance programs like LGM swine LRP.

00;04;04;12 – 00;04;20;02

It does impact the industry overall. Right. And one of the things that happens behind the scenes at Ever AG and elsewhere is we’re always looking for to make sure that we have enough capacity out there to get the coverage we need for producers, right. And so that becomes a question. And all this too is big part of your job, right?

00;04;20;02 – 00;04;35;06

Is is like, hey, we want to make sure that the insurance companies are giving us the space to do what we need to do. Correct. There’s a lot to unpack in your question, so let’s back up. I mean, the one common denominator all insurance products have in common is they probably have some type of reinsurance tied to them.

00;04;35;06 – 00;04;57;06

So basically the insurance company passes the risk on to another insurance company which is called reinsurance. So whether you’re in the space and you’re protecting houses in California or you’re in the crop insurance space, you have to have access to reinsurance to have a healthy insurance environment. So if you back up a few years ago when interest rates were cheap, I mean, capital was readily available.

00;04;57;08 – 00;05;16;20

It didn’t cost much to operate. So insurance had access to potential investment dollars or reinsurance dollars as interest rates have creeped up with some of the potential investors who would put money up for reinsurance have other opportunities that give them a decent return. So even though we’re not directly tied, we are still indirectly tied on the reinsurance side.

00;05;16;20 – 00;05;36;17

We have a team here, and we spent a lot of time looking at the reinsurance markets, trying to make sure that the industry has enough reinsurance capacity. You mentioned LGM. You look at, you know, like swine, LRP in particular, the last four crop years. I mean, we’ve had forex growth just this past crop year, close to just shy of $50 million or growth.

00;05;36;19 – 00;05;54;06

So you’re growing premiums by that, those kind of dollars. It takes a lot of reinsurance capacity to make sure we can adequately service the market. So we’re always watching that. We’re always monitoring it and go full circle back to California. Fires shouldn’t impact us. That has a long tail, and we’ll be talking about it for a long time.

00;05;54;08 – 00;06;09;11

And it’s not to be alarmed about for the average, you know, customer. But it is something that, you know, we wake up and worry about every day is all right. We’re helping with risk management. These insurance products are really popular. Let’s make sure that we keep the capacity in line. Right. And just not to create undue alarms out there.

00;06;09;11 – 00;06;38;10

I mean, these are government programs. There are funding opportunities out there. But what we call APIs, approved insurance providers, they still need to be profitable. And the best way for them to be profitable is to go to outside reinsurance sources versus going to the federal government, moving from insurers topics to the center of the plate, per se. Tom, I shared recently with you a blog post from our friend Jeanette Brenner talking about high quality pork, some specialty product out there that’s sort of modeled after.

00;06;38;10 – 00;06;59;07

It’s like the Wagyu beef, pork, if you will. And we always talk about pork demand and how to grow it. And, you know, are there ways to use specialty cuts to do the job, talk about that product and talk about just an opinion on how, if anywhere, products like this can go. So no more information on that. Our internal team here in Ames, I think it’s safe to say you could call us food snobs.

00;06;59;12 – 00;07;18;18

So we’re always looking for that latest recipe or latest idea of what’s great to cook, great to eat. So when you shared that article, I went ahead ordered some pork. We did try it and kind of wasn’t a true blind taste test, but we bought some traditional pork from our local walker here in Ames. Basically salt and pepper on some pork chops.

00;07;18;18 – 00;07;39;16

And we compared it to this pork that you had recommended. It was actually Iberian pork, but very unique tasting experience. It was outstanding. I would say part of the group said it was the best pork chop they ever had, and everybody would rank it right up there in the top. We are very passionate about major risk on pork, but we’re also very passionate about delivering a quality product.

00;07;39;16 – 00;07;59;04

So we love to do those internal experiments and just see what’s out there and what’s possible. You mentioned Ames. Does it make you excited or nervous to see the Iowa State Cyclones men’s basketball team ranked number two in the United States this week, the highest rating ever for our state men’s basketball. Nervous or excited, I am 100% excited.

00;07;59;04 – 00;08;18;03

I mean, people always ask, why would you want to live in Iowa? And when you have Iowa State basketball and the hype that goes with it, it makes winters in Iowa very enjoyable. And we forget about the cold and we just think about managing risk, working with hog producers and watching Iowa State basketball. Well, it’s big in the poor household, too.

00;08;18;03 – 00;08;34;12

Having married an Iowa State alum, here’s a trivia question for you previous to this week’s number two ranking, what was the highest rank Iowa State has ever attained and when was it? I’m not the guy to ask. If I had a guess, I would say I think we got number three one other time. That is right. Number three.

00;08;34;12 – 00;08;52;05

According to the Des Moines Register today 1956 57 season, Iowa State was ranked number three. Number two this week, trailing only Auburn. I don’t know. We’ve got tickets to the big 12 tournament, but so far the momentum keeps going. So I’m assuming if you go back to the 50s, that was the Roland Rocket year. I didn’t go that far.

00;08;52;06 – 00;09;07;05

All right. Thanks, Tom, for your insight and thank you for joining us today. If you’ve enjoyed listening to Hogg talk, be sure to tell a friend or two and subscribe to us wherever you listen to your podcasts. Thanks for the Insights Crew for their work on today’s show.

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