Following a higher open, July hogs pushed to new contract highs, which also lifted the rest of the hog market. The inventory data is viewed as neutral relative to expectations, but confirmed expectations of record large market hog supplies.
As noted in tonight’s research, the USDA is not expected to make any significant changes to their 3rd quarter pork production estimate in the July WASDE. In June, 3rd quarter domestic disappearance was estimated at 12.3 Lbs, which also is not likely to change significantly. The price model in the chart projects an average 3rd quarter price of $67, the USDA’s own June estimate was at a $62 lean equivalent, while the CME today is offering producers an $80 quarterly average. The pork cutout value was down $1.22 on Thursday but still at $102, while the belly value was up $1.96 at a new high of $194.78. The market is now within $10 of the record high set back in 2014, and confirmation of a top is likely to be followed by a quick and significant correction.
