It was sharply mixed day of trade to end the week. February hogs initially found support under major moving averages and were $1.50 higher at midday, however the market could not hold on to early gains and was back towards unchanged by the close. The CME’s lean hog index was down $.40 at $65.67 for the third consecutive weekly decline.
The price for weaned pig in the spot market bottomed in August and has since mounted a fairly typical seasonal recovery, with Autumn quotes holding well above last year, but still short of the 5 year average. However, the market has started to stall as forward margins have turned down on weaker spring hog futures prices. The USDA this week quoted and average price of $47/head, versus $29 last year and the 5 year average of $49. Forward hog feeding margins turned down this week, and are also slightly below average, which could slow the late year recovery. A record large fall pig crop is expected, and we are bearish spring hog futures on rallies.
