It was an inside day of trading for February hogs, while summer hog contracts once again marked new highs, and at the close futures were lightly mixed but little changed. The hog index was $.88 higher at $63.63 and projected $.59 higher for Monday.
Weaned pigs purchased this week will likely be marketed against the June contract, which again marked new contract highs on Friday, and lifted the June hog crush spread. To start 2018 placed against hog feeding margins are 18% higher than a year ago and the best in 3 years. The chart shows the long term relationship between forward feeding margins and spot weaned pig prices, with margins explaining 78% of the variability in price. The USDA reported an average spot weaned price this week of $69.74/head, up more than $2 from last week, and $16 higher than a year ago. On a per sow basis that’s $730 of revenue versus $560 a year ago. The market continues to encourage expansion, even with record large inventories!
