Pork Profit Maximizer

This bi-weekly market update offers a detailed analysis of various products complete with a discussion of what is happening on the foodservice level. Projections on prices and supplies available in the future are updated on each report.

Current Pork Profit Maximizer

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Pork Profit Maximizer 01/25/2016

Hog slaughter expected to be heavy through early March. Higher prices for pork and hogs expected by spring.

Extreme volatility appears to have become the order of the day in livestock trading as market participants struggle with price risk. While market participants have a fairly good handle on beef, pork or chicken supply conditions and outlook, quantifying the impact on demand from another potential global recession is exceedingly difficult and may prove to be a fool’s errand.



Pork Profit Maximizer Archive

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Pork Profit Maximizer 01/25/2016

Hog slaughter expected to be heavy through early March. Higher prices for pork and hogs expected by spring.

Extreme volatility appears to have become the order of the day in livestock trading as market participants struggle with price risk. While market participants have a fairly good handle on beef, pork or chicken supply conditions and outlook, quantifying the impact on demand from another potential global recession is exceedingly difficult and may prove to be a fool’s errand.


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Pork Profit Maximizer 01/11/2016

Hog slaughter expected to be heavy through early March. Higher prices for pork and hogs expected by spring.

For the week ending January 9 hog slaughter was estimated at 2.375 million head, 10.6% higher than a year ago. The sharp increase in slaughter was much higher than many expected but it is not a total surprise once we account for the slower than expected slaughter during the holiday weeks. The latest USDA Hogs and Pigs report showed that the inventory of hogs that weight 180 pounds or more as of December 1 was up 5.5% from the previous year.

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Pork Profit Maximizer 12/28/2015

 Hogs and Pigs Highlights 

  • Smaller hog supply vs. projections for spring and summer
  • Breeding herd numbers continue to expand
  • Pigs per litter at record high
  • Hog  numbers will be plentiful by fall of 2016 and risk bumping against capacity constraints
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Pork Profit Maximizer 12/14/2015

Key Points:

  • Meat prices pressured  lower as supplies recover quickly in 2015
  • Supply situation will be less burdensome in 2016
  • Exports remain key
  • Potential for COOL related tariffs is a significant risk for US meat exports in 2016
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Pork Profit Maximizer 11/30/2015

High retail prices continue to limit beef volumes, especially for ground beef. Pork prices also high despite sharp wholesale price correction.

Beef and pork prices at the wholesale level have declined sharply since their peaks in 2014 but that has yet to show up in any significant way at the retail level. The latest retail meat price data collected by the Bureau of Labor Statistics and reported by USDA shows that October retail prices for beef, pork and chicken were higher than the previous month and only marginally lower than last year’s levels.

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Pork Profit Maximizer 11/16/2015

Meat Prices Move Lower on Burdensome Supplies and Inadequate Export Demand

Livestock futures have experienced extreme volatility in the last two weeks but the general trend has been  down. In the case of fed cattle, futures erased almost all the gains made in October and the nearby December live cattle contract is trading near contract lows established at the end of September. Lean hog futures also have collapsed following sharp declines in cash hog prices.

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Pork Profit Maximizer 11/02/2015

Hog prices sharply lower on seasonally higher supplies but also signs of weakening demand for bellies

Hog futures were lower for much of the past week on reports of notably lower prices for both hogs and pork in cash markets. The price of IA/MN lean hog carcass on Friday was quoted at $60.97/cwt, $2 lower than the previous week and down $7.5/cwt from a week ago. This may appear like a very dramatic decline, warranting the futures response but a quick look at the seasonal trends reveals that current prices are very much in line with the normal pullback we see in late October and early November.

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Pork Profit Maximizer 10/19/2015

Monthly exports show impact of a strong dollar, weaker demand in world markets.

In early October USDA released the official August statistics for US beef, pork and poultry exports. There was some surprise that pork exports continued to decline in August despite much talk (and speculation) that exports to China were about to explode. Total US exports of fresh/frozen pork in August were 113,976 MT, 7.6% higher than a year ago but 10.5% lower than in 2013 and 2012.

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Pork Profit Maximizer 10/05/2015

Hog  Supplies  Expected  to  be  Steady  to  Slightly Lower  Through  Next  Summer. Breeding herd remains key for prices in late 2016 and 2017.


The  latest  USDA  “Hogs  and  Pigs”  report implies  that hog supplies in 2016 should be  relatively close  to 2015 levels.  Barring any dramatic supply/demand  shocks, we expect  pork  prices in 2016  to  be  only  modestly  higher  than  in  2015.

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Pork Profit Maximizer 09/21/2015

Hog markets have been trending higher in the last  few  weeks  (despite  all  the volatility), buoyed by stronger than expected cutout values  and  expectations  that  demand  this  fall should  be robust enough  to  support  the  seasonal surge in slaughter numbers.  The nearby (October)  hog  futures  contract  closed  on  Friday  at  $71.05/cwt,    the  highest  point  since early  June.  At  this point gone  are  projections  of
hog prices in the mid 50s that  were  being  entertained  in mid  July—pork prices  have  simply  been much  stronger  than  expected.  The pork cutout on  Friday  was  slightly lower but it is still hovering  in  the  low  80  cent range,  providing  packers with good margins.  Part of  the  reason  for  the +350  point  jump  in  hog futures  this  week were reports that higher prices were being paid for hogs in the cash market.

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Pork Profit Maximizer 09/07/2015

Pork  Exports  Higher  than  Year  Ago  in  July, Expected  to  Be  Stronger  in  Second  half  of  2015

USDA  released  on  Friday  its  latest  update  on  monthly US exports and  the  numbers  continued to paint a relatively bearish picture for US export meat demand.

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Pork Profit Maximizer 08/24/2015

Pork Market Situation and Outlook for Fall Supplies and Prices
Livestock futures have been even more volatile than usual this August as market participants struggle to balance reports of weakening global economic growth (a key demand driver) while meat supplies continue to expand and are expected to be even higher in 2016. Hog futures have been dramatically lower so far this year but recently fed cattle and feeder cattle also have been sold quite aggressively as market participants turn increasingly bearish.

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Pork Profit Maximizer 08/10/2015

Pork exports lower in June but expectation is for significant recovery in the second half

Total exports of fresh/frozen and cooked pork in June were 142,658 MT, just 0.6% higher than the same period a year ago. The volume of pork shipments was disappointing given the surge in overall pork production compared to last year and the sharp reduction in prices. While some markets, such as Mexico, have clearly taken advantage of the lower prices and have increased purchases, shipments to Asia remain soft and the lack of Russian business clearly has had a significant impact.

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Pork Profit Maximizer 07/27/2015

Big increase in cold storage stocks and expected large slaughter this fall should offer plenty of opportunities to feature pork this fall.

Total supplies of beef, pork, chicken and turkey in cold storage at the end of June were 2.280 billion pounds, 16.9% higher than a year ago and 7.1% higher than the five year average.    Stocks declined 1.3% from the previous month in line with the normal draw down that we see in June following the big Memorial Day weekend.

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Pork Profit Maximizer 07/13/2015

Market fears wall of pork in Q4, discounts hog prices for later this fall and winter

Lean hog futures have declined sharply in recent days as market participants see ongoing large weekly slaughter this summer as an indicator of much larger supplies in the fall.    Recent trading has for the most part erased the gains made after the latest USDA Hogs and Pigs report.  The June 1 inventories of the breeding herd as well as the farrowing intentions for Sep‐Nov were smaller than expected.

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Pork Profit Maximizer 06/29/2015

Latest Hogs and Pigs Report Confirms Supply Recovery – But Growth Trend Likely to Be Slower in 2016

USDA published on Friday, June 26, the results of its quarterly survey of hog and pig operations and, for the most part, the results indicated that short term supplies are expected to be relatively close to what the market was expecting. The two big surprises in the report relate to expected supplies in 2016. We expect the report will be viewed by futures markets as neutral for 2015 futures contracts and moderately bullish for 2016 contracts, especially April, June and July of next year.

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Pork Profit Maximizer 06/15/2015

Poultry Market Disruptions and Implications

For the first time in more than two months there were no confirmed cases of Avian Influenza in commercial poultry operations last week. Since last December, however, there have been 222 cases that have affected some 47 million birds, most of them egg laying chickens and turkeys. Through June 12, USDA reported AI had affected a combined 7.8 MM turkey, 31.4 million table egg laying chickens and 5.8 million pullet chickens (chickens grown for future egg production). Most of the losses have happened between late March and early June. There have been no outbreaks in broiler operations. Because of the disparate nature of the AI outbreak in the poultry sector, the price response across the various segments has been quite different.

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Pork Profit Maximizer 06/01/2015

Ham market seasonality, turkey breast effect and price targets for summer and fall

Ham prices have recovered from the post Easter price decline. A number of factors we think helped the ham market return to more normal trading levels. End users who were sitting on the sidelines as the market collapsed returned to a more normal order flow in May. We also think export business has improved. April pork data will be released next week and we expect to see a significant increase in US pork shipments to Mexico in April, with hams contributing a large part of that growth.

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Pork Profit Maximizer 05/18/2015

Hog Markets Continue to Gain Ground as Memorial Day Needs Come into Focus

Hog futures have mounted a significant rally in the last few weeks on improving seasonal demand in retail markets, good export sales and a return to a more normal order flow from processors. Since late March, the June lean hog futures contract has gained $11/cwt (+15%). Hog prices in the cash market have fared even better. The IA/MN lean hog carcass price (wt. avg basis) closed on Friday at $81.85/cwt, $1.6 higher than the previous day and up some $26/cwt (+45%) compared to where it was trading at the end of March.

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Pork Profit Maximizer 05/04/2015

Seasonal Demand Improvement Supports Cash Hog Markets…But For How Long?

Cash hog and pork prices have gained ground in recent weeks and this has underpinned the rally in hog futures since late March. The pork cutout on Friday was higher once again. USDA quoted the overall cutout at $73.86/cwt, 58 cents higher than the previous day and $3.9/cwt higher than a week ago. The pork cutout still is about 35% lower than a year ago but year over year comparisons will provide a distorted picture for the next few months given the unusual situation created by PEDv last year.

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Pork Profit Maximizer 04/20/2015

Bird flu could create additional headwinds for meat markets in the spring and summer of 2015

Since April 1, there have been 18 cases of Highly Pathogenic Avian Influenza (HPAI) identified in the US. In most cases HPAI has affected turkey farm but the latest case was in a commercial broiler layer flock in Jefferson County, Wisconsin. This is the second such case in a commercial chicken operation and the first case in a chicken operation location in the Mississippi flyway. Given the spread of HPAI along the Mississippi flyway, one could argue that it was just a matter of time before cases of HPAI would be found in some commercial chicken operations.

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Pork Profit Maximizer 04/06/2015

With PEDv behind us, hog industry expansion is back on track

USDA released on Friday, March 27, the results of its quarterly Hogs and Pigs inventory, showing a significant increase in the number of hogs going into the spring but also a smaller than expected increase in the size of the breeding herd. The reaction in the futures markets was predictable. The large inventory numbers were already built into the prices for nearby contracts so there was limited impact there. Deferred futures contracts received some support from the lower breeding herd number and lower than expected pig crop for Jun-Aug.

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Pork Profit Maximizer 03/23/2015

Spread of Bird Flu Likely Bearish for Prices in the Short Term
There have been fourteen cases of highly pathogenic avian flu in the United States this year. So far the impact on broiler and turkey prices has been minimal but that could change quickly as key trading partners announce partial or full bans on US poultry imports. There has been some confusion among market participants as to what impact the spread of avian flu in key production areas could have on the broiler and turkey markets.

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Pork Profit Maximizer 03/09/2015

Pork prices continue to drift lower
Lean hog futures were lower this week on continued weakness in cash hog markets, large slaughter volume and a steady erosion in the pork cutout. Hopes of a market bottom, which permeated trading the previous week, appear to have been premature. For the moment, there appears to be a lot more pork in the market than previously expected and lower prices are required to absorb this additional supply. Inclement weather across heavily populated areas in the Northeast may be a short term factor.

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Pork Profit Maximizer 02/23/2015

Pork supply increase overwhelms the market, offers retailers hard to beat spring bargains

Hog supplies remain much larger than anticipated and when combined with heavy carcass weights and limited exports, this has created a glut of pork that domestic markets are having a tough time absorbing. Extreme winter weather across heavily populated areas of Eastern and Southern US has battered consumer meat demand, particularly at foodservice, adding to the downward price pressure.

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Pork Profit Maximizer 02/09/2015

Exports Will Be a Key Driver for Pork Market in 2015

Pork exports were seasonally higher in December but overall volume remained significantly below levels we have seen in recent years. According to the latest USDA data, total shipments of fresh/frozen and cooked pork on a product weight basis were 135,790 MT in December, 11.4% lower than a year ago. This was the seventh consecutive month of lower y/y pork export sales.

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Pork Profit Maximizer 01/26/2015

Outside market influence continues to impact livestock markets. Fears of demand slowdown persist

Cattle and hog futures continued to retreat last week as market participants worry that the global economic growth stagnates in the next 12 months. Mounting problems in key markets could dramatically impact demand for meat protein at a time when producers already have begun to ramp up production.

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Pork Profit Maximizer 01/12/2015

Prospects of higher domestic supply availability pressures meat prices.

Poultry production is now significantly above year ago levels and combined with a decline in US meat exports this has dramatically changed meat supply availability in the US. Prices for a number of products, particularly pork and chicken are well below levels established just a few months ago. Weekly poultry production data is reported with a one week lag but we estimate ready to cook broiler production last week was 772 million pounds, 8% higher than the previous year.

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Pork Profit Maximizer 12/29/2014

Hogs and Pigs Survey Shows Adequate Supplies this Spring, more Hogs in 2016

The results of the latest USDA Hogs and Pigs report confirmed what many in the trade already suspected—hog supplies have recovered following the devastating impact of PEDv. What is more, the producer response to high death losses and lower feed costs has been to increase the size of the breeding herd.

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Pork Profit Maximizer 12/15/2014

Tremors in Broader Commodity Markets Pressure Livestock Complex Lower

Both cattle and hog futures were down sharply last week, tracking a dramatic sell-off in the crude oil market which saw crude prices drop to $57/barrel, the lowest level since 2009 (see chart). While on the face of it lower oil prices could be construed as supportive of US consumer spending, and hence meat demand, there are broader implications from the recent  oil price decline which have caused market participants to adopt a more defensive stance.

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Pork Profit Maximizer 12/01/2014

Hog market following seasonal as panic subsides

Nearby lean hog futures continued to move lower this past week on increasing pork supplies and weak wholesale pork values. Lean hog carcass futures have declined sharply from the levels established earlier in the year, largely due to the easing supply crunch and also significantly lower prices in the cash hog market.

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Pork Profit Maximizer 11/17/2014

Pork Market Trends
Lean hog futures also gained over 500 points in the last few days – the question is how sustainable are current gains given the steady
decline in the value of the cutout since early October. And, if pork prices are indeed poised to move up, what will/should lead the charge.

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Pork Profit Maximizer 11/03/2014

Lean hog futures traded lower this week and the nearby December contract is now down almost $8/cwt (-8%) for the month of October. While hog futures tried to rally late last week and early this week, gains proved to be short lived given continuing weakness in wholesale pork markets and sharp declines in cash hog prices.

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Pork Profit Maximizer 10/20/2014

Lower feed costs set the stage for higher chicken and pork supplies in 2015

The latest USDA Supply/Demand reports (WASDE) confirmed what many in the industry were expecting – record corn yields and a substantial increase in the supply of corn and soybean meal available for the 2014-15 marketing year. Corn ending stocks, basically corn that is not sold and carried over into the next year, now are projected to be well over 2 BILLION bushels, a 150% increase from the tight supply levels of just two years ago.

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Pork Profit Maximizer 10/06/2014

More hogs are on the way but don’t expect a market crash anytime soon.

On Friday, September 26, 2014 USDA issued the results of tis quarterly survey of US Hogs and Pigs operations. The survey measures inventory levels as of September 1 as well as producer expectations of hog supplies in the next two quarters. USDA also revised some of its earlier estimates so that they match the slaughter data for the Jun-Aug quarter.

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Pork Profit Maximizer 09/22/2014

Cheap corn should spur hog production … but when?

There is plenty of anticipation ahead of the upcoming USDA Hogs and Pigs report (September 26), especially considering the dramatic supply hole that developed in the spring and summer of 2014. Corn prices are now approaching $3 per bushel, a 60% decline from the highs established in the fall of 2012.

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Pork Profit Maximizer 09/08/2014

July data show significant slowdown in beef and pork export shipments.

Pork: Exports of fresh/frozen and processed pork in July were 133,906 MT, 1.6% lower than a year ago. The decline in exports would have been larger if not for a surge in pork exports to Russia, before the ban was announced in early August.

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Pork Profit Maximizer 08/25/2014

Hog prices drop on softer demand and expectations of increasing hog numbers in fall and winter months. Lean hog futures have declined sharply since hitting an all-time record high in early July. The decline has accelerated in recent days, as sharp declines in cash hog prices have caused market participants to unwind long positions across the board.

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Pork Profit Maximizer 08/11/2014

June beef and pork exports were once again higher but the pace of growth has slowed down as high prices push world buyers towards other markets.

US export shipments of beef and pork were higher in June despite sharply higher prices in the first half of the year. Strong export demand has been part of the reason for the firm meat protein markets and the latest export data was a confirmation of that trend.

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Pork Profit Maximizer 07/28/2014

USDA released on Tuesday (July 22) the results of its monthly survey of about 800 public and private refrigerated warehouses and the results will viewed as bullish for cattle and, to a lesser extent, for hog futures. Below is a recap of the highlights from this latest report and implications for meat market trends in the short to medium term.

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Pork Profit Maximizer 07/14/2014

With profitability back in the meat business, growth is not far behind

The good times are back for US red meat and poultry producers. Record high prices for cattle and hogs and a sharp decline in feed costs has put most producers back in the black following a a number of years of poor margins and breeding stock liquidation.

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Pork Profit Maximizer 06/30/2014

USDA Hogs and Pigs Report: Bullish on the face of it…but plenty of questions as well.

The latest USDA Hogs and Pigs report will likely be viewed by futures markets on Monday as largely neutral for nearby contracts but bullish for the winter and spring markets (Dec, Feb and maybe April).

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Pork Profit Maximizer 06/16/2014

Tight supplies and better demand push red meat and poultry prices higher

Rising prices and high volatility have been the primary themes in meat complex so far this year and the past two weeks were a case in point. Fed cattle futures jumped by as much as $10/cwt in a matter of days and hog futures for the summer months established new all-time contract highs.

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Pork Profit Maximizer 06/02/2014

May 1 Cold Storage Stocks Sharply Lower

USDA released on Thursday, May 22, the results of its monthly survey of refrigerated warehouses and the results were for the most part supportive for meat prices going into the summer months. The survey data was particularly bullish for beef and chicken, with overall stocks of these two commodities down sharply compared to both last year and the five year average. Pork stocks also were lower than a year ago but we did not see the rate of depletion that we saw in March.

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Pork Profit Maximizer 05/19/2014

Export market demand and impact on red meat and poultry prices

Global demand for US beef, pork and poultry products remains strong and it has been one of the factors underpinning the sharp price inflation across many meat protein items. It is no coincidence that products showing the biggest price increases so far this year (beef briskets and short plates, pork ham and trimmings) tend to be items that are big export items.

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Pork Profit Maximizer 05/05/2014

After panic buying, spot pork market is better supplied…but for how long?

Pork prices rose sharply in March and early April as short spot supplies and speculation of dramatic cutbacks during the summer months caused a frenzy inpork product markets. The spike in pork prices also should be seen in the context of record high beef prices, especially in the price of retail staples such as ground beef and round cuts.

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Pork Profit Maximizer 04/21/2014

The pork cutout has been declining steadily in the past two weeks although the overall cutout value towards the end of last week seemed to stabilize around $121/cwt. USDA quoted the Friday (April 18) cutout at $121.34/cwt, down $3.42/cwt compared to the previous Friday and down $12/cwt (-9%) from the peak established April 2.

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Pork Profit Maximizer 04/07/2014

Hogs and Pigs survey paints a less bullish picture than private analysts, adding to volatility in pork market.

The results of the March USDA Hogs and Pigs inventory survey had bearish implications for the summer hog market.

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Pork Profit Maximizer 03/24/2014

Sharp drop in hog slaughter and panic buying causes spot market supplies to dry up.

The sharp run-up in pork and beef prices has caught a lot of market participants by surprise and they are now scrambling to catch up.

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Pork Profit Maximizer 03/10/2014

Record pork prices amidst uncertainty and fear about summer market top

Pork prices established an all-time record high this week as the pork cutout was quoted by USDA at $111.99/cwt, 43% higher than that previous year. Current prices have now surpassed the all-time record established last June at $111.33/cwt.

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Pork Profit Maximizer 02/24/2014

Fear reigns supreme – Beware the volatility

Volatility is the name of the game in the meat protein markets at the moment. Wholesale prices for a number of beef items reached all- time record highs in January only to pull back sharply just as quickly. Pork prices are also trending higher and currently hog futures, sitting at all-time record levels for the summer months, imply significantly higher prices for a number of items, particularly bellies, hams and trimmings.

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Pork Profit Maximizer 02/10/2014

The latest USDA export update for the most part painted a positive picture for both beef and pork trade. Below is a recap of the highlights from the December report, a summary of exports for the year and implications for 2014.

Exports of fresh/frozen and cooked pork in December were pegged at 153,257 MT, 6.6% higher than the previous year. This was the first year over year increase in pork exports since July and the biggest y/y increase for 2013.

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Pork Profit Maximizer 01/27/2014

Low beef stocks, ample chicken supplies and a whole lot of bellies – that’s a two second recap of the latest USDA Cold Storage monthly survey.

Total pork inventories increased in December, somewhat of a bearish signal given the tendency for stocks to decline going into the year end holidays.

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Pork Profit Maximizer 01/13/2014

Export Update

Pork exports have been weak for much of this year, in part reflecting high pork prices but also due to limited demand from key markets in Asia and the closure of the Russian market. Total US pork exports in November were 152,427 MT, down 6,700 MT or 4.2% compared to a year ago.

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Pork Profit Maximizer 12/30/2013

Spread of PEDv limits hog expansion and pork supplies for 2014

There was plenty of anticipation ahead of the USDA quarterly Hogs and Pigs report, issued on December 27, 2013. The number of PEDv cases has escalated since September and futures markets have built significant risk premiums into forward contracts in anticipation of tighter pork supplies.

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Pork Profit Maximizer 12/16/2013

Limited Meat Supply Growth in 2014 Despite Lower Feed Costs

In the last two reports we have covered the impact that PEDv virus is expected to have on US pork supplies next year. We thought this week we could take a step back and look at the overall meat protein complex.


Pork Profit Maximizer 12/02/2013

PEDv Disease is Spreading, Cutting Short Hopes of a Rebound in Pork Supplies

Even after several months of tracking the outbreak of PEDv among US hogs, we still don’t know exactly how many farms have been affected and the number of pigs lost to the disease. What we do know, however, is that the disease is spreading and it will likely continue to spread as the disease affects farms in key production areas.


Pork Profit Maximizer 11/18/2013

Hog market and PEDv Disease: Implications for hog prices in the spring

Cash hog prices and nearby futures have declined sharply in recent days. The IA/MN weighted average cash hog prices was quoted on Friday at $79.58/cwt, down almost $15/cwt compared to early October. In the short
term, market participants continue to focus on seasonal factors: heavy carcass weights and increased supply of hogs available for marketing.


Pork Profit Maximizer 11/04/2013

Hog Markets Remain Volatile

Hog futures have been buoyed in recent days by ongoing speculation that hog/pork prices will remain firm on good demand prospects and short supplies due to the spread of PEDv virus. On the demand front, the expectation of tight cattle supplies and record beef prices certainly has been supportive of the hog and pork market.


Pork Profit Maximizer 10/21/2013

USDA hog and pork prices finally were published on Thursday and Friday and they paint a somewhat muddled picture. The IA/MN hog price on Friday was quoted at $90.83, which is quite close to where the October futures settled earlier in the week. Despite the lack of market information, it appears that participants in the futures market were pretty good in their assessment of spot market prices.


Pork Profit Maximizer 10/07/2013

Hogs and Pigs Report Implies Y ear/Y ear Increase in Slaughter – But For Now Slaughter Continues to Run Behind Expectations

The latest Hogs and Pigs report defied all expectations and there are plenty of market participants that are taking the results with a healthy dose of scepticms.


Pork Profit Maximizer 09/23/2013

Hog supplies: Short term squeeze or a more sustained shortage?

To say the current hog market is difficult to read would be an understatement. Cash lean hog carcass price on Tuesday hit $97/cwt, further pinching packer margins which have been quite poor in the last few weeks. It appears packers had enough as they basically walked away from the market, causing Saturday slaughter
to drop to just 30,000 head, a pretty dramatic number considering that this is the time of year when Saturday slaughter generally tends to hover above 150,000 head per week.


Pork Profit Maximizer 09/09/2013

Fall Hog Futures Rally on Firm Wholesale Prices, Speculation of Smaller than Expected Hog Supplies

Hog futures have rallied in recent days as the market has been buoyed by very strong prices for a number of wholesale items. Hog slaughter also has been tracking well below year ago levels for the last three weeks and the expectation is for hog slaughter to remain below year ago levels at least through the end of September.

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Pork Profit Maximizer 08/26/2013

Canadian cattle and hog supplies show very limited growth and should have almost no impact on the rate of change in North American red meat supply in 2014.

Sometimes the tendency is to look at US beef and pork supplies isolated from the global supply picture. The reality is that the US pork and beef industry over the past 20 years has become increasingly integrated with the livestock industry of both Canada and Mexico. NAFTA removed many of the barriers to trade although the more recent COOL (Country of Origin Labeling) legislation, threatens to once again make trade among North American nations more difficult.


Pork Profit Maximizer 08/12/2013

Nearby August lean hog futures hit contract highs last week, buoyed by renewed strength in wholesale prices and generally tighter supplies than a year ago. Pork cutout values usually reach their annual highs in early July but this year, similar to what we saw in 2011, wholesale pork prices continue to trade quite firm well into August.


Pork Profit Maximizer 07/29/2013

Pork Trim Supplies and Implications for Price Response

The implementation of the Mandatory Pork Price Reporting system has made available data that was not available in the past. One of the questions raised in recent weeks concerns the sharp spike in the price of pork trimmings, so we sifted through some of the mandatory price and volume data for any clues. Keep in mind that the mandatory price
reporting for pork remains incomplete at this point.


Pork Profit Maximizer 07/15/2013

PEDv virus and outlook for pork supplies later this year and early 2014.

There has been some media coverage of the PEDv virus and the potential impact this could have on pork supplies. Market participants also are worried that if the virus spreads, it could indeed create a marketing
hole later this year. Based on the information available to this point, we think the supply impact will be limited.

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Pork Profit Maximizer 07/01/2013

Hogs and Pigs Reports implies modes supply increase in short term but more hogs coming to market in 2014.

The latest USDA Hogs and Pigs report could be construed as supportive of hog prices in the short term but with implications for higher supplies, and possibly lower prices, in 2014. USDA reported that as of June 1, there
were 66.647 million hogs and pigs on US farms, slightly less than a year ago.


Pork Profit Maximizer 06/03/2013

Pork Prices Higher than a Year Ago as Belly Prices Hit Record Highs

US pork belly prices are currently priced at a 70% premium to year ago levels and at the highest level on record. The jump in the price of pork bellies has accounted for almost the entire increase in the price of the pork cutout recently. On Friday, May 31 the pork cutout closed at $94.31/cwt, $11.92/cwt or 14% higher than a year ago. The pork cutout has been trending above year ago levels since early April, in line with the runup in the price of pork bellies.


Pork Profit Maximizer 05/20/2013

With Chicken No Longer a Bargain, More Balanced Promos Likely in the Second Half of 2013

For much of 2011 and 2012, chicken prices lost significant ground compared to other main meat proteins. While the ratio of whole broiler prices to the price of live cattle averaged about 0.81 during 2000-12, the multiple declined to as low as 0.6 in late 2011 and for much of last year it hovered below 0.7.

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Pork Profit Maximizer 05/06/2013

What is the path for US pork exports, prices this summer and fall

The March export numbers for pork were dismal, providing further confirmation that soft export demand in Q1, and lackluster domestic sales, were responsible for the 13% decline in the price of lean hogs and the 6% decline in the value of the pork cutout. While there is some anecdotal evidence that export demand may be improving, we need to review what the latest export numbers are telling us, with an eye to implications for summer and fall pricing.


Pork Profit Maximizer 04/22/2013

We recently updated our estimates for pork prices through the end of 2013 and in 2014. Download the report from our executive summary as it pertains to hog and pork prices.


Pork Profit Maximizer 04/08/2013

Hog Inventories Larger Than Expected, More Supplies Down the Road

According to the latest USDA survey of US hog producers, total hog and pig inventories as of March 1 were 65.911 million head, 1.5% larger than a year ago.

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Pork Profit Maximizer 03/25/2013

Pork producers were able to dramatically change the trajectory of pork production last fall and the production declines were sustained in January. Total commercial pork production last month was 2.065 billion pounds, 3.9% larger than a year ago. When adjusting for the difference in slaughter days, however, pork output was 0.4% lower than in January 2012.


Pork Profit Maximizer 03/25/2013

Pork Market Remains Weak as Exports Pull Back

The IA/MN lean hog carcass price closed on Friday afternoon at $70.57/cwt., almost $2/cwt. lower than what it traded the previous day and about $12/cwt. or 15% below year ago levels. The decline in lean hog values reflects continued weakness in domestic wholesale pork markets and, even more importantly, a marked slowdown in US pork exports. The current lean hog price is the lowest since December of 2010.


Pork Profit Maximizer 03/11/2013

Slowdown in US Exports Makes More will have to be absorbed in the domestic market. Product available in the Domestic Market Futures markets for hogs and cattle have removed.

The growth in US beef, pork and chicken exports has slowed down in recent months. While beef exports in January were up, they were in negative territory for much of 2012. Pork exports were sharply lower in January while chicken export growth is notably slower than it was in the first half of 2012.


Pork Profit Maximizer 02/11/2013

USDA recently announced that it would postpone the release of the Mandatory Pork Price report in real time. The report will continue to be published with a one week delay in order to give packers and processors time to adjust to the new price reporting system. USDA does not currently issue a weekly report based on the mandatory reports. According to USDA, the mandatory pork report will be issued in real time by July per the Congressional mandate that set up the system.

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Pork Profit Maximizer 01/28/2013

Supplies of pork in cold storage remain well above year ago levels although the situation for
specific items differs greatly. Total pork in cold storage as of December 31, 2012 was 554.4
million pounds, 14.4% higher than a year ago and also 13.3% above the five year average.


Pork Profit Maximizer 01/14/2013

US pork exports remain key to pork pricing going forward. Exports are expected to account for
close to a quarter of all US pork sales in 2013 and the expectation is for continued growth due
to high prices of competing proteins and steady improvement in the global economic picture.

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Pork Profit Maximizer 12/31/2012

December 1 Hogs and Pig: Revisions are the story. The latest USDA Hogs and Pigs report was decidedly bearish in its implications for pork supplies and prices at least through the summer of 2013 and likely beyond.

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Pork Profit Maximizer 12/17/2012

An increasingly larger share of US beef, pork and poultry production now goes to export markets, making trade flows a critical driver for meat protein prices.

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Pork Profit Maximizer 12/03/2012

Econom, Fiscal Cliff and Outlook for the Food Business in 2013

The economic picture appears to be improving, with economic growth in Q3 at +2.7%, 700k jobs added in the last four months, higher housing prices, lower gasoline prices and relatively strong equity values. All this has led the US consumer confidence index to hit the highest level in five years.

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Pork Profit Maximizer 11/19/2012

News this week: “Pork Prices Lower But Likely Not For Long. Wholesale pork prices have succumbed to the seasonal price pressures and moved lower in recent days. The pork cutout closed on Friday at $82.23/cwt, $4.4/cwt or 5% lower than the previous week and $7.9/cwt or 9% lower than a year ago.”

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Pork Profit Maximizer 10/22/2012

SPECIAL QUARTERLY EDITION: Steiner recently updated its long term forecasts for all meat protein supplies and prices through the end of 2014. Below is a brief excerpt from our executive summary that outlines our rationale and expectations for the coming years.

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Pork Profit Maximizer 10/08/2012

New this week: “The latest USDA survey of US Hog and Pig operations indicated that pork producers have responded to sharply higher feed costs by curtailing growth plans and also accelerating the number of hogs expected to come to market in the near term.”

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Pork Profit Maximizer 09/24/2012

News this week: “There seems to be little disagreement that meat prices will be higher in 2013. Sharply higher feed costs are expected to drive liquidation as producers struggle to bring a margin back in the business.”

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Pork Profit Maximizer 09/10/2012

News this week: “Hog prices have collapsed as producers rush to bring more hogs to market. There has been plenty of conversation among market participants and analysts as to whether the recent decline in hog values is a reflection of producers simply pulling ?hogs forward (thus cutting short feed times) or whether it reflects a glut of supply.”

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Pork Profit Maximizer 08/27/2012

News this week: “Lean hog futures have pulled back sharply in the last two trading sessions as market participants worry about pork prices going into the fall. The nearby October Lean Hog contract closed on Friday at $72.375/cwt., almost 350 points or 4% lower than earlier in the week. This was a new contract low.”

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Pork Profit Maximizer 08/13/2012

News this week: ” The latest USDA supply/demand report confirmed what many analysts had been warning about for a few weeks. The US corn crop has been damaged considerably by extreme drought conditions across much of the Midwest, cutting the projected US corn output by about 20% compared to what was projected earlier in the season.”

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Pork Profit Maximizer 07/30/2012

News this week: “Lean hog futures were higher this week as market participants were buoyed by reports of higher wholesale pork prices. The nearby CME August Lean Hog contract closed the week at $95.2 /cwt, $1.500/cwt higher than a week ago.”

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Pork Profit Maximizer 07/16/2012

News this week: “Starting in May and through October of each year, the US Department of Agriculture publishes a weekly report on the health and condition of pastures and ranges across the country.”

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Pork Profit Maximizer 07/02/2012

News this week: “USDA released on Friday afternoon the results of its quarterly survey of US Hog and Pig operations. While the survey showed that total hog supplies are higher than a year ago, we think that the report also provided a more bullish rationale for prices in late 2012 and particularly 2013.”

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Pork Profit Maximizer 06/18/2012

News this week: “Nearby hog futures closed lower on Friday but for the past few days both futures and cash market prices for hogs have been on fire. The nearby July contract was trading around $84/cwt. in late May but since then has gained almost $10/cwt., closing on Friday at $93.025/cwt.”

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Pork Profit Maximizer 06/04/2012

News this week: “Cattle and hog futures have bounced back in recent weeks, in part driven by higher prices in the cash market but also seasonal improvement in demand at retail. June hog futures which back in March were trading as high as $100/cwt., declined to around $84/cwt. into early May.”

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Pork Profit Maximizer 05/21/2012

News this week: “One of the arguments for the continued weakness in the pork market has been that prices quickly enough to clear the market. While export shipments have been strong, at least through Q1, lower prices have been needed to stimulate volume movement.”

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Pork Profit Maximizer 05/07/2012

News this week: “Lean hog futures continued to drift lower in the past week and the nearby May lean hog contract closed at $79.8/cwt., almost 20% lower than what the market was pricing spring hogs in mid- February. Hog futures continue to be pressured by a combination of poor demand at retail, foodservice and export as well as increasing pork supplies.”

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Pork Profit Maximizer 04/23/2012

News this week: “Beef, pork and poultry supplies in cold storage as of March 31 were reported at 2.073 billion pounds, 1.5% higher than a year ago and 1.1% higher than the five year average. Meat protein inventories were higher despite lower broiler supplies than a year ago.”

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Pork Profit Maximizer 04/09/2012

News this week: “The total inventory of hogs and pigs as of March 1 was estimated at 64.872 million head, 1.9% higher than a year ago and larger than analyst estimates looking for a 1.7% increase.”

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Pork Profit Maximizer 03/26/2012

News this week: “Pork supplies in cold storage were larger than expected and notably higher than a year ago. Particularly worrying was the sharp increase in the supply of pork trimmings. While higher export numbers have been skewing the cold storage numbers for some time, the sharp rise in pork trim stocks coupled with a significant decline in trim values indicates that product is backing up in freezers.”

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Pork Profit Maximizer 03/12/2012

News this week: “Summer hog futures are currently priced at around $95/cwt, about $5/cwt lower than where they were two weeks ago. Futures have been negatively impacted by ongoing weakness in the wholesale pork complex.”