Hogs Still Climbing on Thursday

Lean hog futures are trading slightly higher despite a decrease in the national average base hog price, which fell $1.96 to $105.19. Pork export sales remain weak, near marketing year lows at 9,739 MT, though shipments reached a 15-week high of 33,761 MT driven by demand from Mexico and Japan. The pork cutout value increased by $2.01 to $115.09, and hog slaughter is up from both last week and the same week last year, indicating increased supply.

Analysis

The lean hog market is exhibiting mixed signals, with futures contracts such as Jul 25 Hogs advancing $0.250 to $109.100, while USDA’s national average base hog negotiated price declined $1.96 to $105.19. Further complicating the cash market picture, the CME Lean Hog Index showed strength, rising 94 cents to $100.91 on June 10. On the demand side, pork export sales plummeted to 9,739 MT for the week ending June 5, the second lowest for the marketing year, with Mexico notably showing net reductions. In contrast, export shipments reached a 15-week high of 33,761 MT, primarily destined for Mexico and Japan, indicating robust fulfillment of existing orders. The USDA’s FOB plant pork cutout value provided support, increasing $2.01 to $115.09. However, supply-side pressure is evident with federally inspected hog slaughter figures indicating a weekly total of 1.440 million head, an increase of 17,000 from the prior week and 25,960 head above the corresponding week last year.

Key Decisions for Investors

• Investors should closely monitor the divergence between the declining national average base hog price ($105.19, down $1.96) and the modest gains in lean hog futures (e.g., Jul 25 Hogs at $109.100, up $0.250), alongside the rising CME Lean Hog Index ($100.91), for clearer market direction.
• Upcoming pork export sales data requires careful scrutiny, as the recent weak figure of 9,739 MT represents a significant demand concern, despite current export shipments hitting a 15-week high of 33,761 MT.
• The impact of increased hog slaughter (weekly total 1.440 million head, up 25,960 year-over-year) should be considered as a potential limiting factor for price appreciation, even with the supportive rise in the pork cutout value to $115.09.