Hogs closed mixed on Friday, with February slipping to a new low for the week, while summer prices were lightly mixed around unchanged.
Spot weaned pig prices were barely under last week, at $73.03/head. Demand for wean pigs remains exceptionally strong early in the year, with prices reaching the highest level since December 2014 and the 2nd highest January price quotes. The chart plots the USDA’s price series for both negotiated spot market and formula based pig prices. Most formulas contain variables for the future fat hog prices and/or feed prices, but often spell out a ceiling and floor price. All of which helps to dampen volatility and maintain prices in a range to help both buyers and sellers. Negotiated prices on the other hand are a pure function of supply and demand and far more volatile, with prices ranging from a 2008 low of $6/head to a 2014 high of $92. The market is very seasonal, and largely driven by forward margins offered at placement. Note in the chart that most of the peaks were scored between late December and early February, with most occurring in January and so it’s likely that last week’s price marked a top.