Hog futures were on both sides of unchanged through Thursday, before ending mostly higher on continued strength in the cash hog index. The index was up $1.07 on Thursday at $72.99, and is projected another $.56 higher for Friday, which puts total gains for the week at $3.75/cwt.
IA State University’s latest update for hog producer margins showed losses continued through December with estimated returns at a negative $11/head. That was $1 lower than November, but a more than $10 improvement over a year ago, when losses amounted to nearly $24/head. The bright spot in the monthly update was in farrow to wean margins that were more than $18/head, or the highest since January 2015. Estimated cost of production was barely higher, while the average weaned pig price topped $51/head.
Funds look to be adding to their long hog position on seasonal considerations and ideas that strong export demand will develop in the 1st half of the year. We hold to a view of adding to summer sales on rallies above $85 June and July futures.