Early strength in hogs quickly ran into resistance and late day selling put summer prices in the red at the close. December hogs were just above unchanged for the day, but had resistance at the 50 and 100 day moving averages and finished near the low. The hog index was up $1.51 at $70.63 and the weekend slaughter data projects another $1.31 higher for Tuesday. Negotiated trade was called $.17 higher on moderate volume, but momentum looks to be slowing as kill margins have turned back down.
Hog slaughter peaked the last week of March and has been lower since. The load lineup for this week showed scheduled deliveries were fractionally under last week, which keeps the outlook for this week’s kill to 2.26 Mil head or near unchanged from last week. Slaughter and production should continue lower into early July, and then trend higher into the end of the year.
In the near term, we see hog futures for summer delivery as fully valued, with limited upside from current levels. It’s the 4th quarter that still holds the greatest downside risk.
