Markets

Morning Hog Market Report

The hog market traded slightly higher early in the session, and managed to trade to the highest level since May 3rd but ideas that cash hogs may struggle to trade much higher over the near-term may have helped spark some profit-taking selling and moderately lower trade into the mid-session. Ideas that retailers may be about done booking Memorial Day specials, and poor weather for spring demand over the past weekend and in the forecast for early this week, were thought to have been the main negative forces late in the session. Weakness in outside markets was thought to have added to the negative tone for hog futures into the close. Pork cutout values released after the close yesterday came in at $98.31, up $2.96 from Friday and up from $90.91 the previous week. This is a new all-time record high for pork cut-out. A surge higher in ribs up to $161.05 from $142.89 last week helped support the solid gains in recent days. The jump in pork values should support packer profit margins, and may force packers to begin to push cash hog bids higher. Cash hogs traded steady to $1.00 higher yesterday. Ideas that the cool and wet weather over the weekend might create some higher levels of producer marketings helped drive the market lower. The CME Lean Hog Index as of May 12th came in at 92.09, down 32 cents from the previous session and down from 92.17 the week before. The estimated hog slaughter came in at 393,000 head yesterday. This was up from 377,000 head last week and up from 391,000 head a year ago at this time. Pork production for the week last week came in at 410.8 million pounds. Given seasonal trends, weekly pork production for the next three months should see a rough range of 350 to 406 million pounds, as compared with the range from the second week of the year through April 16th of 421 to 455 million pounds. The seasonal decline in production can sometimes support cash hogs. The seasonal may be stronger than normal this year. Pork production normally declines by about 150 to 300 million pounds from the 1st quarter to the second quarter of the year. This year, the USDA believes production will decline by 365 million pounds, the second largest decline on record.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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