THE SWINE TIMES

Below is how the weekly product market changed for the week ending 9/8/17.

*Product	Price Tuesday 9/5	Price Friday 9/8	Net Change
Loins	82.30	83.27	.97
Butts	95.04	92.55	(2.49)
Picnic	57.00	55.55	(1.45)
Rib	133.16	127.52	(5.64)
Ham	71.42	71.30	(.12)
Belly	127.87	115.16	(12.71)
Carcass Cutout	84.96	82.12	(2.84)
* National Carcass Base Price	61.89	58.65	(3.24)
* National Live Price	49.46	47.99	(1.47)

**Estimated USDA Hog Slaughter	Week ending 9/9/17	2,170
Actual USDA Hog Slaughter	Same Period Last year	2,086
	% change year over year	+4%

Live Hog Contract	Tuesday 9/4	Friday 9/8	WTD Net change
October Hogs	63.75	62.15	(1.60)
December Hogs	60.18	58.90	(1.28)
February Hogs	64.55	63.75	(.80)

Looking into next week:

• The product market was under pressure all week. Next week, the packer/processors may try to slow down the rate of decline on some of the cuts (bellies). In the opinion of Swine Times, this will be difficult to do. Some cuts will steady out or at least slow the rate of decline. The packer may be able to pull this off next week, but the week of 9/18 could be different. When surplus product shows up on the market from next week’s (9/11) slaughter of 2.4 million plus head, holding the product steady may be extremely difficult to do. If this does happen, the product could move down further.
• The bellies appear to be making bottom, and whether it is short term or not remains to be seen. Here at Swine Times, we think it could ultimately go lower once the processors get enough in the freezer to make them comfortable. As these 2.4 million+ kills continue, this could force the bellies lower in order to entice processors to freeze even more at a lower price. If you are a processor, remember the goal. Processors do not want to happen next year what happened this year: have the USDA composite belly price go over $2.00 cwt. and be caught short raw material that has to be bought on the spot market.
• Weather is again a factor. Florida, at the time of this writing, is bracing for a hurricane of a potentially historic magnitude. This, like Texas, will close retail food chains, restaurants etc. Warehouses will be closed and no dry goods or meat will be shipping to Florida.
• The shipping ports in Miami, Florida and Savannah, Georgia are already closed, further backing up product and creating a bottleneck at the points of origin. This will facilitate the further decline of pork cuts.
• Packers have good margins and will not be inclined to cut their slaughter schedules. They will lower the prices to a level at which it will clear the wholesale and retail channels.

How do we trade this?

• As you could tell from the 230 point rally in October hogs we had on Tuesday 9/5, the hog market can be extremely volatile. This is just a reminder all of us to trade lightly, as these times can be unpredictable and caution is truly a virtue in these markets. Don’t get into a position where the margin clerks call the shots for you.
• Once again, we continue to monitor the hog weights in order to make an assessment of the current status of the market hog herd. The interior Iowa weights last week went up almost 2 lbs. This is seasonal and nothing out of the ordinary for this time of year. However, this puts them at 3lbs. over last year’s interior Iowa weights for the same time period. If this year over year weight spread continues to widen, we could be:
  1. Backing up hogs, or
  2. There are just more out there than was predicted.

In either scenario this is not bullish live hog prices. Watch this relationship closely.
Watch for further corrections in the price of February hogs in order to start lightly buying them. As we get into October, we still want to cover our October hog shorts and may even consider going long when the product market looks like it may be turning around.
* USDA National Hog and Pork summary
** Expressed in thousand head

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