You are here
Hog Slaughter: Biggest Week Since 1st of June
We stated before the week got going that a slightly higher slaughter would be seen this week then a big bump up next week. Well this week’s run came in bigger than (slightly higher). Adding in today’s 345,000 run and the 25,000 Saturday total puts numbers at 1.919 million. That is 52,000 head larger than last week. It is the biggest kill since the first week of June. Bulls also need to consider the fact that PED problems are waning as well. This week’s run was only 5.2% smaller than last year. With 4.8% heavier weights this week’s pork production was only 0.4% under last year.
With production “back to normal” now many will question about our pricing. Shouldn’t we therefore be near the prices from last year? Last year’s April expired at $102 with October at $91. Today’s prices are $12 over that for the August and $8 over for the October. While we certainly need a premium this year, due to the hole in beef production, the trade has some valid concerns even after this month-long break.
In June, we sent Russia 25 million lbs of our pork. That was 6% of our exports that month. This equates to 1% of our pork production. This will have the same price impact as though production just increased 1% overnight. In June, Russia was sent 59 million lbs. of chicken (9.6% of our exports). We will now have a little extra pork and a moderate increase in chicken at the meat counter. The chicken meat we send them is almost all dark meat. This abundance of lower end product left in the US could be an issue.
This market has fallen below our $104 target price for October futures that was discussed at the AgLeaders Summer Conference. December futures are now under the $92 price discussed. Producers are urged to hold their hedges discussed at the conference. That was a $110 put with a sold $117 call. We expect stability to come next week.
This material has been prepared by a sales or trading employee or agent of Allendale Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Allendale Inc.’s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Allendale Inc. believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.