Prepared by Phoenix AgriTec Inc.
April proved to be a difficult month for the hog industry as producer margins eroded due to a buildup of negative fundamentals which caused prices to move in a lower direction. Seasonally April marks a time for stronger demand as warmer weather encourages more consumers to increase grilling habits and therefore demand higher levels of pork cuts. However this spring demand was seen as lackluster and almost non-existent in nature as cutout fell $4.52 led by a $12.56 loss in bellies. The majority of the hog carcass is hams, which also fell moderately, losing $5.65 compared to the previous month.
Tumbling carcass values discouraged traders as some started to believe that export demand would not stay on track with last year’s levels. Excessive hog weights were also seen as a bearish component in both the cash and futures market as supplies outweighed demand and therefore backed up the pipeline and indicated that marketings were not current. Packer margins were also a limiting factor as some packers decreased their weekend slaughter schedules in order to regain market strength in hopes that wholesale cutout prices would be lifted and consequently give more incentive to the packer.
Canadian cash hog prices fell significantly, in tandem with the US base prices which lost steam as pork prices fell to 17-month lows. The ISM fell $3.91/cwt, while the WCB gave back $3.80/cwt compared to the previous month. Olymel dropped $8.09 CAN per hog, with the Sig3 losing $7.71 CAN per hog. Slaughter based pricing programs also fell sharply, but managed to limit the downside slightly due to lag base pricing. Maple Leaf’s Sig4 lost $7.22 CAN per hog, while Tyson’s VMR slipped $6.79 US per hog. The lower exchange rate was seen negative towards prices as it makes our domestic products less desired by foreign buyers. The average Bank of Canada noon rate was reported -0.0013 basis points at 0.9926 CAN/US.
|
Canadian Hog & Pigs Inventory |
Apr-12 |
Jan-12 |
Apr-11 |
Q/Q |
Y/Y |
|
All Hogs and Pigs |
12,040 |
12,020 |
11,830 |
0.2% |
1.8% |
|
Kept for Breeding |
1,310 |
1,312 |
1,310 |
-0.2% |
0.0% |
|
Market |
10,730 |
10,708 |
10,520 |
0.2% |
2.0% |
|
Under 50 pounds |
4,235 |
4,239 |
4,092 |
-0.1% |
3.5% |
|
50-199 Pounds |
2,219 |
2,211 |
2,079 |
0.4% |
6.7% |
|
120-179 Pounds |
2,191 |
2,213 |
2,201 |
-0.1% |
-0.5% |
|
180 Pounds and Over |
2,085 |
2,045 |
2,148 |
2.0% |
-2.9% |
|
Sows Farrowed |
709 |
720 |
708 |
-1.5% |
0.1% |
|
Pig Crop |
7,266 |
7,407 |
7,201 |
-1.9% |
0.9% |
The latest hog inventory figures released by the USDA, which includes hogs and pigs in both the US and Canada, showed a bigger herd from year ago levels. With total inventory rises of just under 2% in both Canada and the US from this time last year, the report was taken as rather bearish. Despite this perception, it is worth noting the finer details of the overall report. In Canada, the total number of hogs and pigs were nearly flat with the previous quarter. Farrowing intentions in Canada from the previous quarter were greatly revised lower for April through June to 2.3% while the July through September intentions are anticipated to decrease 1.2%. Considering this, it is well within reason to determine that the Canadian pig crop will be likely lower than reported in 2011 for the third quarter and quite possibly for the fourth quarter as well.
Canadian AIl Hogs And Pigs