In this week’s episode of Feedstuffs Precision Pork, Dave Bauer, senior market analyst for Provimi, recaps some pork industry and market highlights for the week and lists some of the things to think about as we prepare for next week.
This has been a good week with hog market trends again finding some solid traction, and that traction has given us a little bit of a tailwind, says Bauer. He believes the market has some momentum to look forward to in the next week.
In the markets this week, USDA’s weekly new pork sales were reported at 31,800 metric tons, down 17% versus last week and down 4% versus the four-week average. These sales fell short of expectations. As based on the strength seen in hams over the past several days, Bauer says expectations were not for this 17% drop.
Still, Bauer says not to worry. Think of it this way. This just means that even though we didn't see the big ham sales for export, we've obviously had some strong domestic demand to drive hams higher.
This could be one of the best weeks we've seen for price strength in a long time, and what does this all translates into on the topic of forward profitability? Bauer says when he plugs the $2.25/cwt. CME index gains into the big flash model, this has improved nearby profitability by $4.50 cents/head. Yes, this still generates losses of $20 to $40 per head, depending on the market are producers connected to, but in these challenging times, reducing loss, this is a welcome site, he says.
Bauer notes that this improvement is a direct result of the pickup in demand and is reflected in the bull spreads. As long as this nearby demand driven strength continues, he believes we can continue to improve the forward outlook. Still this isn't without some very large challenges ahead. Even with those challenges, Bauer remains optimistic about what’s ahead. Take a listen.
These are uncertain times and it will pay dividends to be well-prepared. If you have questions on this week’s recap or want to discuss something not covered, feel free to ASK DAVE at David_Bauer@cargill.com. Plan today for tomorrow’s success.