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Hog Talk – September 10, 2024
In the Hog Talk podcast from Ever.Ag Insights, host Mike McGinnis and Joe Kerns, President of Ever.Ag’s Livestock Division, discuss the latest trends in hog prices, the outlook for pork production, and the impact of lower feed costs. They also explore domestic and export demand, including the influence of avian influenza and strong exports to Mexico.
Listen in for key insights and strategies for pork producers.
Listen NowQuestions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;26
VOICEOVER
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.
00;00;08;28 – 00;00;27;12
MIKE
Hello and welcome to Hog Talk, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the hog market. I’m your host, Mike McGuinness, and today is Tuesday, September 10th, 2024. Turning to our guest this week, it’s our privilege to have Joe Kerns, president of Ever Eggs Livestock Division. Joe, thanks for joining us.
00;00;27;14 – 00;00;29;07
JOE
Glad to be here, Mike. Thanks for having me on today.
00;00;29;08 – 00;00;49;25
MIKE
Well, we’re going to talk about a number of things. First off, the current hog prices. Lean hogs. Anyway, for October, the futures hit 8250 to 108 to start this month. It’s fallen back since but it’s up from the mid August level of 7285. So we’re up. But the thing is maybe it’s a little bit diverging from the hog and pork prices that have really fallen back from the July highs.
00;00;49;26 – 00;00;52;04
MIKE
Could you speak about the price movement here first?
00;00;52;05 – 00;01;11;28
JOE
Let’s start with the back end that you referenced. Seasonally, we make our highs in the summertime and then regress coming back into the fall. As far as pork prices are concerned. And we’re following that seasonal decline. So that is not an moment or anything that’s of great concern. I think the good news to the market is kind of how you led this off is that we were down into those low 70s.
00;01;11;28 – 00;01;29;02
JOE
We rallied up into the low 80s. Guys, that’s $10 100 weight. That’s $20 a pig. And that’s a significant number to the pork producer. We pulled back here just a little bit, but not much. And we’re trying to bounce back here. So we’re trying to hover into that just shy of $80. Let’s call it range. And Mike I think it’s justified.
00;01;29;03 – 00;01;48;01
JOE
We’ve seen the supply of animals rolling through the turnstiles not being as burdensome as what we had feared. You’ve got the large packing community that is not putting in as many Saturdays as anticipated. That’s not putting pork back onto the market. And so you’re seeing some support in the cutout values that is then being reflected back to the futures as we find equilibrium.
00;01;48;01 – 00;01;58;20
JOE
And this is actually good news for the pork producer. Even though we’re off our summer highs, we fully anticipated that we’re not bottoming out near the levels that we had feared that we might at this point in time.
00;01;58;23 – 00;02;08;26
MIKE
Well, the last time we talked, the forward look for the pork production sector didn’t look as good. Are we still in the dire straits or what has changed in the profitability outlook?
00;02;08;27 – 00;02;33;04
JOE
We’re a heck of a lot better than we were, but it is still not. Captain Fantastic 2024. It looks like we’re going to be fighting for kind of a break even year, something similar for 2025. And those that have the capital deployed, you might not be doing backflips over breaking even, but it’s a lot better than what we were looking at, i.e. a $10 per head plus loss both for 2024 and 2025.
00;02;33;04 – 00;02;51;05
JOE
Before, we saw just a little bit of a rally here that you’d mentioned earlier. So I think we’re going to hold serve right now. Our biggest friend is what’s going on in the European Union. As far as their continued pullback in production. You’ve got some more regulation that are being debated that are due to be instilled here over the next couple of years.
00;02;51;06 – 00;03;18;00
JOE
Now we were talking about these yesterday, Mike. They will absolutely decimate what that herd looks like. And just as far as a point of reference, the EU herds almost exactly two X of the United States. So a 10% pullback in the EU is the same thing as a 20% pullback in the United States. And we saw that over the last 3 to 4 years is the EU has lost 10% of their herd and probably is going to be projected to lose at roughly that amount over the next 3 to 4 years.
00;03;18;00 – 00;03;26;22
JOE
So the United States, if we can just hold on right now, there are greener pastures ahead, but it is going to take some staying power on the part of the production community.
00;03;26;25 – 00;03;48;26
MIKE
Now, what about the input side? New crop corn and soybean meal prices look better than a year ago. Cash corn prices in southwest Iowa, I noted it’s a big hog production area. Cash hog prices averaged just under $4 per bushel in August, compared with 535 last year. The question to you is the bane of the agri sector the boon for the livestock guys?
00;03;48;27 – 00;04;10;10
JOE
Certainly. So let’s bring this up. It absolutely helps the livestock guys. And you know, we’re advocates for all of agriculture. There’s going to be winners and losers amongst the stream as we go. You’ve got kind of a break even situation. It’s strange now that I’m just thinking about this now. But 2024 and 2025 look to be roughly break even for the agronomic sector also.
00;04;10;10 – 00;04;30;19
JOE
So they’d had some really good profits over the last few years and maybe were just starting to compress these things in together. So I wouldn’t call the reduction of the grain price the boon for the pork producer. If you take a weighted average of what is most important, the revenue side completely overrides anything. We can afford to pay $7 for corn.
00;04;30;19 – 00;04;55;22
JOE
If hogs are trading at $100 per 100 weight, so it is not the absolute most imperative piece. It absolutely helps. And so keeping these things in relationship and an idea of how the whole metrics start to work is beneficial. But certainly we’ve seen the fall from grace on the side, from the revenue component for the pork producer, having those inputs that are reduced in value certainly helps and is probably a contributing fact.
00;04;55;22 – 00;05;08;00
JOE
Let’s call it 25% of the gain that we’ve had from what we were talking about last time of these huge deficits into the break, even about a quarter of that is related to this reduction in the input pricing. You are correct.
00;05;08;02 – 00;05;25;21
MIKE
Let’s move to demand. Pork demand seems to be slipping. Hams are still kind of the bright spot. They’re still selling even for those preparing ham sales for Thanksgiving. So we’re already moving out of that summer mode and into the fall and even closer to the Thanksgiving supply. So talk about the impact of demand on prices.
00;05;25;22 – 00;05;48;02
JOE
So domestic demand is awfully static. And what you’re referencing with this ham price bump up probably has more to do with exports to Mexico, which we’ve been absolutely Captain Fantastic. The brightest spot that we have in the entire port complex is our exports, which are going to be roughly 7% higher in 24 relative to 23. And our forward look for 24 still is even moving higher again.
00;05;48;02 – 00;06;05;22
JOE
So that is our bright spot that’s underpinned some of these cuts. Hams I think is the most pronounced one. And you properly identify that. The other piece, keep in mind is this high path avian influenza that is rolling through. And if you’ve been to the grocery store and seen what egg prices have done recently, those certainly have escalated.
00;06;05;22 – 00;06;28;00
JOE
Although eggs are still an incredible bargain for the amount of protein. But that also has fear of doing the exact same thing to the turkey industry. And so as we come into Thanksgiving, I don’t think that you’re going to see incredible pressure onto the ham market, given the disease pressure that we’ve had in the avian sector so far, as well as the export markets specifically going to Mexico, have given us some support.
00;06;28;00 – 00;06;46;29
JOE
So I think that we’re going to be kind of in pretty good shape, actually, as a pork production community coming into the fourth quarter, demand kind of holding steady on the domestic front, being good on the export side of it. And that’s about a 7525 ratio also of domestic versus export is about where we trade. And so I think we have to put that one into the category of yeah, we’re not too bad.
00;06;47;00 – 00;06;53;10
JOE
We’re not too bad. We might be out producing relative to our shackle space capacity, but I wouldn’t call demand being disastrous.
00;06;53;10 – 00;07;00;18
MIKE
Maybe finally the so what segment Joe, we always like to talk about what are the opportunities for pork producers and where should they be focused.
00;07;00;23 – 00;07;18;22
JOE
We’ve got a big grain harvest coming at us. I think basis is going to widen up. You’re going to have an opportunity on the procurement side for your inputs to really see a widening of basis. Are free to store. Situation is going to get completely saturated in the United States. You’ve got a world scenario that is going to be surplus beans.
00;07;18;22 – 00;07;36;15
JOE
We’re already projecting a record crop coming out of Brazil before we even let one planter roll. And so I think this is important. So I would be opportunistic on my corn purchases from a cash standpoint. I’d be very, very patient on my soybean meal. I think we can easily get soybean meal back below $300. And to sustain that.
00;07;36;15 – 00;07;54;16
JOE
And on the revenue side, I think we’re in an era where we’re not going to be near as bad as what we feared. Taking advantage of some of those forward margins, specifically with the interplay between LGM and LRP on a government subsidized insurance product that you don’t have to pay for until you market the animals, is really the structure.
00;07;54;16 – 00;08;08;17
JOE
So being smart about everything and again, we’re not swinging for the fence on this one. We’re not trying to hit home run. We’re trying to keep the ball in play and wait until the environment changes to where we can be a bit more aggressive, but right now it probably warrants a more conservative view.
00;08;08;21 – 00;08;10;16
MIKE
Joe, thanks for your time. We appreciate it.
00;08;10;20 – 00;08;12;17
JOE
I love being with you. Thanks for having me today.
00;08;12;17 – 00;08;29;01
MIKE
Great stuff. Joe Kearns, president of Bragg’s livestock Division. And that will do it for this episode. And thank you for joining us today. If you’ve enjoyed listening to Hog Talk, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thanks the Egg Insights Crew for their work on today’s show.
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
The post Hog Talk – September 10, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
In the Hog Talk podcast from Ever.Ag Insights, host Mike McGinnis and Joe Kerns, President of Ever.Ag’s Livestock Division, discuss the latest trends in hog prices, the outlook for pork production, and the impact of lower feed costs. They also explore domestic and export demand, including the influence of avian influenza and strong exports to Mexico.
Listen in for key insights and strategies for pork producers.
Listen NowQuestions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;26
VOICEOVER
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.
00;00;08;28 – 00;00;27;12
MIKE
Hello and welcome to Hog Talk, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the hog market. I’m your host, Mike McGuinness, and today is Tuesday, September 10th, 2024. Turning to our guest this week, it’s our privilege to have Joe Kerns, president of Ever Eggs Livestock Division. Joe, thanks for joining us.
00;00;27;14 – 00;00;29;07
JOE
Glad to be here, Mike. Thanks for having me on today.
00;00;29;08 – 00;00;49;25
MIKE
Well, we’re going to talk about a number of things. First off, the current hog prices. Lean hogs. Anyway, for October, the futures hit 8250 to 108 to start this month. It’s fallen back since but it’s up from the mid August level of 7285. So we’re up. But the thing is maybe it’s a little bit diverging from the hog and pork prices that have really fallen back from the July highs.
00;00;49;26 – 00;00;52;04
MIKE
Could you speak about the price movement here first?
00;00;52;05 – 00;01;11;28
JOE
Let’s start with the back end that you referenced. Seasonally, we make our highs in the summertime and then regress coming back into the fall. As far as pork prices are concerned. And we’re following that seasonal decline. So that is not an moment or anything that’s of great concern. I think the good news to the market is kind of how you led this off is that we were down into those low 70s.
00;01;11;28 – 00;01;29;02
JOE
We rallied up into the low 80s. Guys, that’s $10 100 weight. That’s $20 a pig. And that’s a significant number to the pork producer. We pulled back here just a little bit, but not much. And we’re trying to bounce back here. So we’re trying to hover into that just shy of $80. Let’s call it range. And Mike I think it’s justified.
00;01;29;03 – 00;01;48;01
JOE
We’ve seen the supply of animals rolling through the turnstiles not being as burdensome as what we had feared. You’ve got the large packing community that is not putting in as many Saturdays as anticipated. That’s not putting pork back onto the market. And so you’re seeing some support in the cutout values that is then being reflected back to the futures as we find equilibrium.
00;01;48;01 – 00;01;58;20
JOE
And this is actually good news for the pork producer. Even though we’re off our summer highs, we fully anticipated that we’re not bottoming out near the levels that we had feared that we might at this point in time.
00;01;58;23 – 00;02;08;26
MIKE
Well, the last time we talked, the forward look for the pork production sector didn’t look as good. Are we still in the dire straits or what has changed in the profitability outlook?
00;02;08;27 – 00;02;33;04
JOE
We’re a heck of a lot better than we were, but it is still not. Captain Fantastic 2024. It looks like we’re going to be fighting for kind of a break even year, something similar for 2025. And those that have the capital deployed, you might not be doing backflips over breaking even, but it’s a lot better than what we were looking at, i.e. a $10 per head plus loss both for 2024 and 2025.
00;02;33;04 – 00;02;51;05
JOE
Before, we saw just a little bit of a rally here that you’d mentioned earlier. So I think we’re going to hold serve right now. Our biggest friend is what’s going on in the European Union. As far as their continued pullback in production. You’ve got some more regulation that are being debated that are due to be instilled here over the next couple of years.
00;02;51;06 – 00;03;18;00
JOE
Now we were talking about these yesterday, Mike. They will absolutely decimate what that herd looks like. And just as far as a point of reference, the EU herds almost exactly two X of the United States. So a 10% pullback in the EU is the same thing as a 20% pullback in the United States. And we saw that over the last 3 to 4 years is the EU has lost 10% of their herd and probably is going to be projected to lose at roughly that amount over the next 3 to 4 years.
00;03;18;00 – 00;03;26;22
JOE
So the United States, if we can just hold on right now, there are greener pastures ahead, but it is going to take some staying power on the part of the production community.
00;03;26;25 – 00;03;48;26
MIKE
Now, what about the input side? New crop corn and soybean meal prices look better than a year ago. Cash corn prices in southwest Iowa, I noted it’s a big hog production area. Cash hog prices averaged just under $4 per bushel in August, compared with 535 last year. The question to you is the bane of the agri sector the boon for the livestock guys?
00;03;48;27 – 00;04;10;10
JOE
Certainly. So let’s bring this up. It absolutely helps the livestock guys. And you know, we’re advocates for all of agriculture. There’s going to be winners and losers amongst the stream as we go. You’ve got kind of a break even situation. It’s strange now that I’m just thinking about this now. But 2024 and 2025 look to be roughly break even for the agronomic sector also.
00;04;10;10 – 00;04;30;19
JOE
So they’d had some really good profits over the last few years and maybe were just starting to compress these things in together. So I wouldn’t call the reduction of the grain price the boon for the pork producer. If you take a weighted average of what is most important, the revenue side completely overrides anything. We can afford to pay $7 for corn.
00;04;30;19 – 00;04;55;22
JOE
If hogs are trading at $100 per 100 weight, so it is not the absolute most imperative piece. It absolutely helps. And so keeping these things in relationship and an idea of how the whole metrics start to work is beneficial. But certainly we’ve seen the fall from grace on the side, from the revenue component for the pork producer, having those inputs that are reduced in value certainly helps and is probably a contributing fact.
00;04;55;22 – 00;05;08;00
JOE
Let’s call it 25% of the gain that we’ve had from what we were talking about last time of these huge deficits into the break, even about a quarter of that is related to this reduction in the input pricing. You are correct.
00;05;08;02 – 00;05;25;21
MIKE
Let’s move to demand. Pork demand seems to be slipping. Hams are still kind of the bright spot. They’re still selling even for those preparing ham sales for Thanksgiving. So we’re already moving out of that summer mode and into the fall and even closer to the Thanksgiving supply. So talk about the impact of demand on prices.
00;05;25;22 – 00;05;48;02
JOE
So domestic demand is awfully static. And what you’re referencing with this ham price bump up probably has more to do with exports to Mexico, which we’ve been absolutely Captain Fantastic. The brightest spot that we have in the entire port complex is our exports, which are going to be roughly 7% higher in 24 relative to 23. And our forward look for 24 still is even moving higher again.
00;05;48;02 – 00;06;05;22
JOE
So that is our bright spot that’s underpinned some of these cuts. Hams I think is the most pronounced one. And you properly identify that. The other piece, keep in mind is this high path avian influenza that is rolling through. And if you’ve been to the grocery store and seen what egg prices have done recently, those certainly have escalated.
00;06;05;22 – 00;06;28;00
JOE
Although eggs are still an incredible bargain for the amount of protein. But that also has fear of doing the exact same thing to the turkey industry. And so as we come into Thanksgiving, I don’t think that you’re going to see incredible pressure onto the ham market, given the disease pressure that we’ve had in the avian sector so far, as well as the export markets specifically going to Mexico, have given us some support.
00;06;28;00 – 00;06;46;29
JOE
So I think that we’re going to be kind of in pretty good shape, actually, as a pork production community coming into the fourth quarter, demand kind of holding steady on the domestic front, being good on the export side of it. And that’s about a 7525 ratio also of domestic versus export is about where we trade. And so I think we have to put that one into the category of yeah, we’re not too bad.
00;06;47;00 – 00;06;53;10
JOE
We’re not too bad. We might be out producing relative to our shackle space capacity, but I wouldn’t call demand being disastrous.
00;06;53;10 – 00;07;00;18
MIKE
Maybe finally the so what segment Joe, we always like to talk about what are the opportunities for pork producers and where should they be focused.
00;07;00;23 – 00;07;18;22
JOE
We’ve got a big grain harvest coming at us. I think basis is going to widen up. You’re going to have an opportunity on the procurement side for your inputs to really see a widening of basis. Are free to store. Situation is going to get completely saturated in the United States. You’ve got a world scenario that is going to be surplus beans.
00;07;18;22 – 00;07;36;15
JOE
We’re already projecting a record crop coming out of Brazil before we even let one planter roll. And so I think this is important. So I would be opportunistic on my corn purchases from a cash standpoint. I’d be very, very patient on my soybean meal. I think we can easily get soybean meal back below $300. And to sustain that.
00;07;36;15 – 00;07;54;16
JOE
And on the revenue side, I think we’re in an era where we’re not going to be near as bad as what we feared. Taking advantage of some of those forward margins, specifically with the interplay between LGM and LRP on a government subsidized insurance product that you don’t have to pay for until you market the animals, is really the structure.
00;07;54;16 – 00;08;08;17
JOE
So being smart about everything and again, we’re not swinging for the fence on this one. We’re not trying to hit home run. We’re trying to keep the ball in play and wait until the environment changes to where we can be a bit more aggressive, but right now it probably warrants a more conservative view.
00;08;08;21 – 00;08;10;16
MIKE
Joe, thanks for your time. We appreciate it.
00;08;10;20 – 00;08;12;17
JOE
I love being with you. Thanks for having me today.
00;08;12;17 – 00;08;29;01
MIKE
Great stuff. Joe Kearns, president of Bragg’s livestock Division. And that will do it for this episode. And thank you for joining us today. If you’ve enjoyed listening to Hog Talk, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thanks the Egg Insights Crew for their work on today’s show.
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
The post Hog Talk – September 10, 2024 appeared first on .
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