Hog Outlook. February, Commodity & Ingredient Hedging, LLC

Transcription

1 Hog Outlook February, 2017 Commodity & Ingredient Hedging, LLC

2 Hog Outlook February, 2017 In This Issue: Current Margins Supply Fundamentals Demand Fundamentals Summary Copyright 2016 Commodity & Ingredient Hedging, LLC 2

3 Historical Price Reference Where are Hog Prices Currently, And Where are they Historically? Copyright 2017 Commodity & Ingredient Hedging, LLC 3

4 Historical Price Reference Copyright 2017 Commodity & Ingredient Hedging, LLC 4

5 Historical Margin Reference Insert Comparative CK Chart from Website

6 Historical Margin Reference Insert Comparative CK Chart from Website

7 Historical Margin Reference Insert Comparative CK Chart from Website

8 Historical Margin Reference Insert Comparative CK Chart from Website

9 Historical Margin Reference Insert Comparative CK Chart from Website

10 Fundamental Backdrop December 2016 Hogs & Pigs Report

11 Fundamental Backdrop December 1 Quarterly Hogs & Pigs Report Actual Avg Est Range of Est Diff from Est All Hogs & Pigs 68,919 71, % % % Kept for Breeding 6,002 6, % % % Kept for Marketing 62,917 65, % % % Under 50 lbs 20,008 20, % % % ,262 18, % % % ,370 13, % % % 180 and over 12,276 12, % % % Sows Farrowing Sep-Nov farrowings 2,929 3, % % % Dec-Feb farrowing intentions 2,927 2, % 99.90% % Mar-May farrowing intentions 2,968 2, % % % Sep-Nov Pig Crop 30,848 32, % % % Sep-Nov Pigs/Liter % % %

12 Million Head Million Head Million Head Million Head Fundamental Backdrop 75,000,000 U.S. Hog Inventory: All Hogs and Pigs on December % 75,000,000 U.S. Hog Inventory: All Hogs and Pigs on March % 70,000,000 65,000,000 60,000,000 55,000,000 50,000, % 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 70,000,000 65,000,000 60,000,000 55,000,000 50,000, % 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% Number Of Head Number Of Head 75,000,000 70,000,000 65,000,000 60,000,000 55,000,000 50,000,000 U.S. Hog Inventory: All Hogs and Pigs on June % 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 75,000,000 70,000,000 65,000,000 60,000,000 55,000,000 50,000,000 U.S. Hog Inventory: All Hogs and Pigs on September % 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% Number Of Head Number Of Head

13 Million Head Million Head Million Head Million Head Fundamental Backdrop U.S. Pig Crop: December - February U.S. Pig Crop: March - May 36,000, % 36,000, % 115.0% 115.0% 31,000,000 26,000,000 21,000,000 16,000, % 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 31,000,000 26,000,000 21,000,000 16,000, % 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% Number Of Head Number Of Head U.S. Pig Crop: June - August U.S. Pig Crop: September - November 36,000,000 31,000,000 26,000,000 21,000,000 16,000, % 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 36,000,000 31,000,000 26,000,000 21,000,000 16,000, % 115.0% 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% Number Of Head Number Of Head

14 Fundamental Backdrop Current Supply Side

15 Million Head Fundamental Backdrop Weekly Hog Slaughter Current Vs. Previous Vs. 5 Year Average Year Average Jan 27-Jan 16-Feb 7-Mar 27-Mar 16-Apr 6-May 26-May 15-Jun 5-Jul 25-Jul 14-Aug 3-Sep 23-Sep 13-Oct 2-Nov 22-Nov 12-Dec

16 Fundamental Backdrop

17 Million Pounds Fundamental Backdrop 575 Weekly Pork Production Current Vs. Previous Vs. 5 Year Average Year Average Jan 27-Jan 16-Feb 7-Mar 27-Mar 16-Apr 6-May 26-May 15-Jun 5-Jul 25-Jul 14-Aug 3-Sep 23-Sep 13-Oct 2-Nov 22-Nov 12-Dec

18 Fundamental Backdrop Current Demand Side

19 1,000 pounds Fundamental Backdrop U.S. Pork Exports December Year Average Maximum Minimum U.S. Pork Exports for December were reported at million pounds, a decrease of 16.9 million pounds, or 3.3% lower than November. Year over year comparisons however showed gains of 64.5 million pounds, or 15.1% greater than December of 2015.

20 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Thousand Pounds Fundamental Backdrop Total Pork Exports December 2016 (Carcass weight in thousands) U.S. Pork Exports for December were reported at million pounds, a decrease of 16.9 million pounds, or 3.3% lower than November. Year over year comparisons however showed gains of 64.5 million pounds, or 15.1% greater than December of 2015.

21 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Fundamental Backdrop 30.00% U.S. Monthly Pork Exports as Percent of Total Production December % 20.00% 15.00% 10.00% 5.00% 0.00% U.S Pork Exports as a percent of production for December registered at 22.32% versus 22.76% in November, and compares to 19.42% in December of 2015.

22 1,000 Pounds Ahead/Behind Estimate 1,000 Pounds Fundamental Backdrop U.S. Pork Exports USDA Projection versus Actual Shipments Cumulative Ahead/Behind 2016 USDA Estimate 2016 Shipments Monthly needed to meet USDA estimate , January February March April May June July August September October November December

23 Fundamental Backdrop 750, , ,000 Cold Storage Total Pork December 31, 2016 Maximum Minimum 10-Year Average , , , , , , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

24 Fundamental Backdrop Other Studies

25 Fundamental Backdrop

26 Fundamental Backdrop

27 Fundamental Backdrop

28 Margin Tendency

29 Margin Tendency Copyright 2017 Commodity & Ingredient Hedging, LLC 29

30 Summary Hog margins were fairly steady throughout the month of January, as feed prices and hog values both rose. Margins are still near average levels across the board. Total pork in cold storage was reported at million pounds in December, a decrease of million pounds, or 8.02% less than November. The draw outstripped the average 0.03% draw from November to December over the last ten years. The year over year comparison of total frozen pork was also lower, this month by million pounds or 12.54% less than December 2015 inventories. Pork bellies with inventories of 17.8 million pounds were the lowest on record to end the year going back to Pork exports for December were reported at million pounds, a decrease of 16.9 million pounds, or 3.3% lower than November. Year over year comparisons however showed gains of 64.5 million pounds, or 15.1% greater than December of Exports as a percent of production for December registered at 22.32% versus 22.76% in November, but was well above December of 2015 s reading of 19.42%.

31 Commodity & Ingredient Hedging, LLC 120 South LaSalle Street, Suite 2200 Chicago, IL fax internet site: There is a risk of loss in futures trading. The information contained in this publication is taken from sources believed to be reliable, but is not guaranteed by Commodity & Ingredient Hedging, LLC as to accuracy or completeness, and is intended for purposes of information and education only. Nothing therein should be considered as a trading recommendation by Commodity & Ingredient Hedging, LLC. The rules and regulations of the individual exchanges should be consulted as the authoritative source on all contract specifications and regulations. There is a risk of loss in all futures and options trading. Copyright 2014 Commodity & Ingredient Hedging, LLC. All rights reserved.