Hog futures were higher at Monday’s open and then quickly rallied to strong gains, that were largely held into the close. February hogs looking to be drawing continued cash market strength for direction, while summer hog contracts again pushed to new contract highs. The hog index rose $.59 on Monday to $64.22, and the weekend slaughter data projects $1.44 higher for Tuesday.
Packers told the USDA that they had just over 2.1 million head of hog scheduled on Monday for the first work week of the year. Based on Monday’s load lineup, we expect this week’s kill total to come in just over 2.4 million head, which is below the early December average, but will still likely be a record large weekly total for early January.
Pork cutout prices were mixed to start the week, though weakness in picnics and loins pulled the carcass value down $.65. The recent rally in cash hog prices has not been lead by the wholesale pork value, which is narrowing slaughter margins.
Summer hog futures are now the most overbought since early October, and well above what we see as fair fundamental value.
