Hogs Post Gains, as Cash Hogs Rally

Lean hog futures rose on Wednesday, with August contracts leading gains, up $1.05, while June futures declined slightly. The USDA reported a national average base hog price of $103.05, a $4.21 increase, and the CME Lean Hog Index rose to $96.34 on June 2. Hog slaughter was estimated at 483,000 head on Wednesday, bringing the weekly total to 1.423 million, down from last year.

Analysis

Lean hog futures exhibited a generally upward trend on Wednesday, with most 2025 contracts registering gains; notably, August 2025 Hogs advanced by $1.050 to close at $107.500, and July 2025 Hogs rose $0.450 to $105.025. June 2025 futures presented an exception, declining by $0.250 to $99.975. Underscoring this positive momentum in the physical market, USDA's national average base hog negotiated price surged by $4.21 to $103.05 on Wednesday afternoon. Complementing this, the CME Lean Hog Index increased by 44 cents to $96.34 as of June 2, and the USDA’s FOB plant pork cutout value rose by 51 cents to $106.62, primarily driven by higher prices for ham, belly, and picnic primals. A key supportive factor is the tightening supply, evidenced by the federally inspected hog slaughter for the week, which at 1.423 million head, was 14,019 head lower than the corresponding week in the previous year. This reduction in slaughter pace, coupled with rising cash and cutout values, paints a moderately positive short-term picture for the lean hog market.

Key Decisions for Investors

• Investors should consider the prevailing bullish signals, including rising futures prices for most contracts beyond June 2025, significant increases in the national base hog price, and a higher pork cutout value.
• Monitor weekly hog slaughter figures closely, as continued lower slaughter rates compared to the previous year could further support price appreciation due to tighter supply.
• Evaluate the divergence in June 2025 futures, which declined slightly against the broader uptrend, for potential short-term trading considerations or as an indicator of specific near-term contract dynamics.