February hogs marked slight gains in the last day of 2017, while the rest of the market was slightly weaker. Summer hog contracts all pushed to new contract highs at midday, and all were lower at the close on, while the cash hog index was down a penny.
The chart plots the 160 day forward hog crush margin and spot weaned pig prices. Forward feeding margins have been trending higher since the summer and recently pushed to the highest level since early 2016 over the last several weeks. Spot weaned pig prices put in an August low, and have rallied since, with strong feeding margins triggering demand for pigs in the spot market. The USDA quoted an average spot market price this week of $67.40/head, more than $12 higher from the start of the month and more than $17 higher than a year ago. The market continues to tell producers to expand their already record large hog herds. Our view stays bearish on strong rallies on record large US red meat stocks.
