Hogs started the week mostly higher, with February finding support on a break back under $70, while December closed down to narrow the difference to the cash index ahead of next week’s expiration. The CME’s lean hog index was up $.27 at $63.26, and the weekend kill data projects another $.66 higher for Tuesday.
Monday’s slaughter schedule was slightly less than a week ago, but still the 2nd largest of the last year, and this week’s hog kill is expected no less than 2.5 million head, and likely to be closer to last week’s slaughter total. While weekly kill totals remain seasonally strong, slaughter margins continue to expand – largely due to a strong rally in pork belly prices. Estimated slaughter margins this week are estimated near $21/cwt ($45/head), versus $9 in late October.
June and August hogs both traded at new contract highs on Monday. Our view is that strong rallies to the mid/upper $80’s should be used for summer sales, amid record large production.
