Hogs were lower at the open on Monday and were in the red for most of the day, with Oct and Dec contracts each finding resistance against unchanged. The hog index was down $1.08 at $64.07, and projected $1.27 lower for Tuesday.
Negotiated trade continues to weaken and was quoted $.78 lower for Monday, while the pork cutout gained $.33 to $78.09 on stronger belly and rib prices. The spread between the cutout value and the lean hog index was at 14/cwt, for an estimated slaughter margin near $30/head.
Last week’s hog kill was the largest of the year at 2.432 million head, and an expanded kill is expected for this week. As of Monday morning, packers had just under 2.2 million head of hogs scheduled for the week, up 3% from a week ago, which indicates that this week’s slaughter total could be near 2.46 million.
Weekly slaughter rates and production should continue to increase, and we doubt seasonal lows have been traded. Dec hog back to $60-62 ahead of the inventory report offer the next sales opportunity.
