30 December 2022

2 minute read

By: Jim Wyckoff

February lean hog futures this week have rallied to near the recent highs, including the contract high of $93.30. Bulls have the firm near-term technical advantage. However, weakness in the cash hog market may limit the upside in futures. The latest CME lean hog index is quoted down 13 cents to $78.60 (as of Dec. 23). That is the lowest in almost a year. The five-day national direct rolling average cash hog price today was quoted at $78.30. 

Hog market bulls are hoping a seasonal bottom in cash prices is close at hand, evidenced by the big gains in hog futures on Tuesday. Rising corn and soybean meal futures prices this week also likely limited buying interest in hog futures. USDA’s bullish quarterly Hogs & Pigs report last Friday should limit the downside in the hog market in the near term. The agency estimated the Dec. 1 hog herd at 73.119 million head, down 1.327 million head (1.8%) from year-ago and 210,000 head under pre-report estimates. Hog inventories fell 2.0% to 68.321 million head and the breeding herd at 6.154 million head was 0.5% above last year.

USDA Hogs and Pigs Report: Herd smaller than expected, but signs contraction phase is ending.

USDA estimated the Dec. 1 hog herd at 73.119 million head, down 1.327 million head (1.8%) from year-ago and 210,000 head less than the average pre-report estimate implied. The market hog inventory at 68.321 million head declined 2.0%, while the breeding herd at 6.154 million head rose 0.5% from last year. The data should be supportive for winter-, spring and early-summer lean hog futures. Far-deferred contracts could face mild pressure with the data implying the herd contraction phase may be coming to an end.

China to investigate ‘excessive’ hog price decline

China’s state planner said on Wednesday it called a meeting of hog industry experts to ensure stable prices after recent excessive declines. According to experts the slump was due to a “temporary” period of weak consumption, it said, adding that there is no oversupply.

The next week’s likely high-low price trading ranges:

February lean hog futures--$87.00 to $95.00 and with a sideways-higher bias

March soybean meal futures--$443.40 to $469.30, and with a sideways-higher bias

March corn futures--$6.60 to $7.00 and a sideways-higher bias

Latest analytical daily charts lean hog, soybean meal and corn futures